Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

GREENOCK PORT AND HARBOURS ORDER CONFIRMATION

Bill to confirm a Provisional Order under the Private Legislation Procedure (Scotland) Act, 1936, relating to Greenock Port and Harbours, presented by Mr. Maclay; read the First time; and ordered (under Section 9 of the Act) to be read a Second time upon Thursday, 11th July, and to be printed. [Bill 109.]

Oral Answers to Questions — EMPLOYMENT

Industrial Workers (Period of Notice)

Mr. Shepherd: asked the Minister of Labour if he will give an estimate of how many men engaged in British industry are subject to not more than one day's notice.

The Parliamentary Secretary to the Ministry of Labour and National Service (Mr. Robert Can): Only a very small minority of workers in British industry are subject to so short a period of notice, but it is impossible to estimate the number.

Strike, Gillingham

Mr. C. R. Hobson: asked the Minister of Labour if he will make a statement on the officially sponsored strike which commenced on 27th May at Messrs. Rodi and Weinenberger (Great Britain) Ltd., operating at 41, Barnsole Street, Gillingham, Kent.

The Minister of Labour and National Service (Mr. Iain Macleod): Twenty-nine employees at this firm, members of the

Transport and General Workers' Union, ceased work on 27th May in protest against their wages and conditions of employment. Neither the employer nor the union sought the assistance of my Department. Work was resumed on 24th June and negotiations are taking place in which, I understand, representatives of the Engineering Employers' Association are assisting.

Mr. Hobson: Does the Minister's reply mean that his Department does not now propose to interfere (a), to prevent disputes arising, or (b), to settle them, unless they are disputes in an industry which is vital to the economy of the country? Is the right hon. Gentleman aware that this German firm has been carrying on industrial practices which are entirely contrary to British standards, including working norm?

Mr. Macleod: As regards the first part of the hon. Gentleman's supplementary, of course my Department is always available, although it usually waits until a dispute is brought to its notice, but not, of course, in every case. As regards the second part, I think that the trouble arose because this firm was not a member of the Employers' Association. It has now applied for membership, and I understand that there is a likelihood that a settlement will be achieved.

Dock Workers, Cardiff

Mr. Callaghan: asked the Minister of Labour (1) how many dock workers were registered for employment at Cardiff in 1951 and 1957, respectively;
(2) the percentage of dock workers who, because of absence of employment at Cardiff docks, have had to prove attendance, at the latest available date.

Mr. Iain Macleod: The numbers of dock workers on the Cardiff register at June, 1951, and at June, 1957, were 1,017 and 764, respectively. During the week ending 15th June, 1957, on an average approximately 12·4 per cent. of the dock workers proved attendance daily because work was not available.

Mr. Callaghan: Is the Minister aware that the last figure he has given is an underestimate of normal conditions in Cardiff, and that, yesterday morning for example, 65 per cent. of the dockers of Cardiff were out of work? Is he aware


that this situation is of growing seriousness there, and that the men are really wondering whether they have any future at all, the difficulties of living on a guaranteed week of £5 14s. being such as to make things practically impossible for them?

Mr. Macleod: In view of what the hon. Member said, I will look at the numbers of those proving attendance over a longer period than I indicated in the Answer. As he knows very well, that figure fluctuates so much that the figure for any given day is not necessarily significant.

Mr. Robens: After the right hon. Gentleman has looked at it, if he finds that the trend is downwards, as appears to be the case from the 1951 figures which he gave, what action would he propose to take to bring more employment to the South Wales ports and to Cardiff in particular?

Mr. Macleod: The size of the labour force in a port is a matter for the National Dock Labour Board and not for my Ministry. If there is any way in which my colleagues in the Government can help after I have made the examination which I have undertaken to make, I will bring it to their notice.

Mr. G. Thomas: In view of the severe hardship which has been caused to families in Cardiff, will the Minister consult the President of the Board of Trade to see whether steps can be taken to improve the trade at Cardiff docks? It seems to me that there is a great indifference in the Ministries.

Mr. Macleod: I think that is covered by the answer to the last supplementary question.

Mr. J. Griffiths: Bearing in mind that for generations Cardiff, as a coal-exporting port, played a very big part in the economic life of this country, and bearing in mind that because of changed circumstances that trade has gone, is it not essential to attract new trade to Cardiff; and, as part of that plan, will the Minister discuss this matter with the Minister of Transport to find out whether an improvement in the road communications between Cardiff and the Midlands, in particular the Severn Bridge, in order to bring new trade to Cardiff, would be one

of the ways in which this problem could be met?

Mr. Macleod: The question of communications is of first-rate importance in this matter, and I will not forget it.

Employment Exchanges (Closure)

Mr. Simmons: asked the Minister of Labour if he will receive a deputation representative of the local authority and the workers' and employers' organisations before coming to a final decision on the closure of the Brierley Hill local employment office.

Mr. Iain Macleod: No, Sir. The Stourbridge and Brierley Hill Employment Committee which has already tendered its advice on this proposal, is one of the committees specially constituted under statutory authority to advise me on the local working of the employment exchanges, and I feel that it is to this committee that I must look primarily for advice on local opinion and any local factors affecting the matter.

Mr. Simmons: Is the Minister aware that Stourbridge has a majority on that committee? Is he aware that there is 100 per cent. opposition to this decision from the traders' and manufacturers' association, the trades council and Urban District Council in Brierley Hill? Why has he singled out the Brierley Hill area in the whole of the West Midlands for three closures, two of them in the Black Country conurbation, at Brierley Hill and Bloxwich? Will he look into the matter again? If he will not himself receive a deputation, will one of his higher officials receive a deputation?

Mr. Macleod: I have answered the question about a deputation. I think that for that sort of thing I must look primarily to the local employment committee. As for Stourbridge or Brierley Hill having a majority on that committee, that question should not arise, for it is an employment committee which is supposed to look at the problems of employment of that area and to advise me, irrespective of comparative local interests within that area. It is, of course, natural that the Brierley Hill employers or the employers in any other district would like to have an employment office immediately on their doorstep. In the final decision which


I make I will take into account the views which they and the hon. Member have put to me.

Mr. Ainsley: asked the Minister of Labour what representations he has received from the local authority and the local employment committee on his proposal to close the Willington part-time employment exchange; and what decision he has come to.

Mr. Iain Macleod: The Crook and Willington Urban District Council and the local employment committee have asked me to retain this office. I have not yet taken a decision and will give full consideration to the local views before doing so.

Mr. Ainsley: Will the Minister take into consideration the fact that the local people regard this office as part of the essential social services in the area and that its closure would deprive them of an essential avenue of information? Is he aware that, apart from its service to the unfortunate recipients who sign on for their unemployment pay, it is also an avenue whereby information can be given for limited openings of employment suitable to people in the area? Will he pay due regard to representations which have been made along those lines?

Mr. Macleod: Yes. Certainly I will take all those factors into account.

Mr. Rankin: asked the Minister of Labour what communication he has received from the local employment committee with regard to the closing of the Kinning Park, Glasgow, local office; and what are its terms.

Mr. Iain Macleod: The local employment committee concerned has asked me to retain the office at Kinning Park, Glasgow. The agreed minutes of the special meeting held to consider the question of closing the office are not yet available, but I am advised that the main points made were that the office covered an area which was expanding industrially; that hardship would be caused to disabled persons and to casual dock workers especially and that the savings which would be achieved were small compared with the loss of services involved. I shall give full consideration to the views of the committee before reaching a decision.

Mr. Rankin: Is the Minister aware that that was the unanimous decision of the local employment committee, and that no one at all at the meeting supported his proposal to close the office at Kinning Park? Is he also aware that there was an expression of view on the part of the committee that what was wanted here was a reorganisation of these facilities in view of the fact that the adjacent exchange, in South Side, had been enormously expanded due to the introduction of new housing schemes and that the closing at Kinning Park would not help at all? Will the right hon. Gentleman consider this matter?

Mr. Macleod: Yes, I will. When I say that I have not taken a final decision, that is perfectly true. I have not. I think Kinning Park is an extremely difficult case. There are a large number of people on the register. The reason for closing it was simply its proximity to other local offices. I shall, of course, bear in mind the additional point the hon. Member has just made.

Coventry (Minister's Visit)

Mr. Edelman: asked the Minister of Labour what is the object of his forthcoming visit to Coventry; whether he will use the occasion to examine the possibility of redundancy in certain aircraft firms; and what opportunities exist of maintaining the highly skilled men thus displaced in employment where their skill will be used to the utmost of its capacity.

Mr. J. Johnson: asked the Minister of Labour if he will make a statement on his forthcoming visit to Coventry.

Mr. Iain Macleod: The occasion of this short visit is to address a conference of the Women's Engineering Society. I hope to have an opportunity of informal discussion with representatives of engineering employers and trade unions on the general employment situation in Coventry. There is still a national shortage of skilled engineering workers, though it might not be possible for redundant workers to obtain in Coventry the precise sort of work to which they were accustomed.

Mr. Edelman: While assuring the Minister a cordial welcome when he comes to Coventry, may I ask whether he will make his visit rather more than a congratulatory programme? Will he


look particularly into the question of the highly-skilled aircraft workers whose skill is now being lost, either through the workers concerned emigrating or through their turning to work which requires far less skill, with a resultant loss to the country?

Mr. Macleod: This visit arose simply from an invitation to make a speech, and I am glad to accept it. I wanted at the same time to have an opportunity personally to meet some of the people and to talk over just the sort of problem which the hon. Member has in mind. Indeed, the one which he has mentioned is one of those which I particularly intend to look at.

Mr. J. Johnson: Could the right hon. Gentleman find time for a visit to the large modern factory at Anstey of the Armstrong Siddeley firm? In that firm there are 6,000 highly-skilled aircraft workers, and there is intense anxiety among the shop stewards and other workers about their redundancy in the future. Could he see them, if no one else, on his visit to Coventry?

Mr. Macleod: I do not think that I shall be able to pay a special visit because I think my programme has already been arranged, but I can certainly discuss the question he mentioned with local people.

Mr. C. R. Hobson: Will the Minister consult his right hon. Friend the Minister of Supply with a view to considering legislation so that it is possible for these aircraft firms, where there is redundancy, to make aeroplanes originating in other firms, for example, the Viscount, where these other firms are already working to capacity? As this was done in the war, why cannot it be done now?

Mr. Macleod: I am afraid that I am not entirely seized of all the implications of the hon. Member's question, which I think he realises ought probably to be put down to my right hon. Friend the Minister of Supply.

War Department Equipment (Overhaul)

Mr. Lee: asked the Minister of Laobour why his Department has recently been instrumental in sending War Department equipment for overhaul by private contractors.

Mr. Iain Macleod: My Department plays no part in arranging for the overhaul of War Department equipment.

Greenock

Dr. Dickson Mabon: asked the Minister of Labour if he is aware that the percentage of unemployment in Greenock is almost 6 per cent.; and what steps he proposes to take to remedy this situation.

Mr. Iain Macleod: Yes, Sir. My local officers are doing all that they can by submitting unemployed workers to vacancies notified to employment exchanges. It is hoped that new projects not yet fully manned will in due course provide about 700 additional jobs in the area.

Dr. Mabon: Does the Minister realise that with the certainty of unemployment of dockers in the Greenock area in the autumn, plus the recent dismissal of 225 Greenock workers from the Royal Ordnance Factory at Bishopton, that already very bad situation of 6 per cent. unemployed is bound to get worse in the very near future? Will he have a word with the President of the Board of Trade and with the Minister of Supply about the whole position, particularly in view of the last part of his Answer?

Mr. Macleod: The June figure is, in fact, rather better for the area—5·6 per cent.—but there are certain disturbing possibilities for the future which the hon. Member mentioned. I know that my right hon. Friend the President of the Board of Trade and the Secretary of State for Scotland are seized of the importance of this area and of the employment situation in it. If I can help by discussing the matter with them, of course I will.

Ordnance Factories (Redundant Workers)

Mr. Lee: asked the Minister of Labour how many former employees at Royal Ordnance factories were rendered redundant during the past twelve months; and what are the prospects of placing those employees now threatened with unemployment.

Mr. Iain Macleod: Redundancies announced from the Royal Ordnance factories during the past twelve months affected 3,997 full-time and 350 part-time


workers. Discharges became or will become effective at a number of dates between October, 1956, and the end of July, 1957. I am in close consultation with my right hon. Friend the Minister of Supply about future redundancies, but until a final decision is taken about factories to be closed or reduced in size, it is not possible to say what are the prospects of placing in employment the workers who will be affected.

Mr. Lee: Is the right hon. Gentleman aware that we on this side of the House are extremely worried about the Government's policy towards the Royal Ordnance factories which is causing such widespread redundancies? Is he aware that we have now heard that at least one of these factories is to be sold to private enterprise? Would he ensure that the type of work to be done in that factory will make it possible for those workers who are now working there to be maintained in their jobs if private enterprise takes the factory over?

Mr. Macleod: I do not think we should under-estimate, or over-estimate either, the inevitable result of switches in the Government's defence programme, which in any event are, in general, welcome to the whole House. There are bound to be difficulties, but those difficulties, as indeed the Questions today have shown, on the whole have been concentrated in Scotland and in the Potteries. There are many areas in which we shall easily be able to absorb the redundancies which have been created. The only way of answering the hon. Member's question is to say that as long as the economy keeps expanding we ought to be able to absorb within it those who are displaced from Royal Ordnance factories.

Mr. Woodburn: Are the Government looking at the question as a whole? There are many repercussions of what seem to be direct orders to Government Departments and shipbuilding yards as a result of which the productive effort may be considerably dislocated. Are the Government looking into the question as a whole to see whether they can make these changes in the form of a phased reorganisation rather than allow it to happen haphazardly without calculating the Costs?

Mr. Macleod: Yes, we try to do that. I devoted part of my speech in the defence debate, in April I think it was, to that, and the right hon. Gentleman will find details of these arrangements recorded in
HANSARD.

Mr. Swingler: asked the Minister of Labour approximately how many, and what proportion, of the men and women made redundant at the Radway Green and Swynnerton Royal Ordnance factories in the last 12 months are still unemployed.

Mr. Iain Macleod: One hundred and five men and 51 women out of 1,180 discharged from Radway Green are now registered as unemployed, representing 14 Per cent. of those discharged. Ninety-four of the men and 49 of the women were discharged on 28th June. Of 350 part-time women workers discharged from Swynnerton in mid-June, six are registered as wholly unemployed. Sixty-eight others have sought assistance in finding other employment but most of them are available for part-time work only.

Mr. Swingler: Is the Minister aware that those of us who represent North Staffordshire are still extremely concerned about the prospects for these men and women because of the unemployment which exists in the area? Will he ask the Minister of Supply to discuss with him, before any further redundancies are created, the possibility of conversion to civil production in these factories so as to avoid further unemployment?

Mr. Macleod: I am in constant consultation with my right hon. Friend on exactly these sorts of problems. Considering that the redundancies referred to at Radway Green took place only on 28th June, the figures on the whole are not discouraging. Of course, it is probably the case that many on holiday have not yet registered, and the figure may go up later. We shall probably have a clearer picture in a few weeks' time.

Mr. Lee: Can the right hon. Gentleman say what percentage of the work now being performed in Royal Ordnance factories is civil work, and what percentage that is of the maximum amount of civil work being performed in the factories some years ago?

Mr. Macleod: Not without notice. In any case, that is a Question which should be put down to the Minister of Supply.

Disabled Persons, Cardiff

Mr. G. Thomas: asked the Minister of Labour the number of disabled persons registered in Cardiff as unemployed at the latest convenient date and the comparable number for the same month in 1956 and 1955.

Mr. Carr: The numbers were 425 on 20th May, 1957; 436 in May, 1956, and 390 in May, 1955.

Mr. Thomas: Is the Parliamentary Secretary aware that these large figures are disturbing us in the City of Cardiff? Can he hold out any prospect of more employment being available for disabled persons? Their number, of course, is increasing all the time.

Mr. Carr: The hon. Gentleman is not quite correct in saying the number is increasing all the time, because it is slightly lower than it was at the same time last year. It has been pretty stable for a number of years. Of course, we always want to try to reduce it if we can.

Expelled British Nationals, Egypt

Mr. Remnant: asked the Minister of Labour what further progress has been made in placing in employment British nationals who have been obliged to leave Egypt.

Mr. Carr: Two thousand one hundred and sixty-nine British subjects from Egypt have registered for employment. Of these 914 have been found work by my Department. In addition a number have found their own employment and some have emigrated. At 21st June, there were 422 men and women still awaiting placing.

Mr. Remnant: Is my hon. Friend aware that many of these people, particularly ex-employees of Suez contractors, are at an age at which it is extremely difficult to place them, and will he continue his efforts to find them employment?

Mr. Carr: We shall certainly do that. We are doing our very best in the matter.

North Staffordshire

Mr. Swingler: asked the Minister of Labour for how long the level of unemployment in North Staffordshire has substantially exceeded the national average; and what steps he has taken to call to the attention of Government agencies and

public authorities concerned with industrial expansion the need to create new opportunities for employment in this area.

Mr. Iain Macleod: The level of unemployment in North Staffordshire has been above that in Great Britain as a whole since the end of 1955, but only in January and February of this year has it been higher by more than 1 per cent. of the insured population. My right hon. Friend the President of the Board of Trade is aware of the position in this area.

Mr. Swingler: In that case does not the Minister agree that there is a need for new employment, in view of the decline and the short-time working in the pottery industry as well as the redundancies in the Royal Ordnance factories? In view of the existence of those factories, and of the fact that some of them are very well equipped, and in view also of past experience, could they be put to new kinds of production? Will that be borne in mind?

Mr. Macleod: I agree that there is a real need to watch this position most closely, and in particular to see, if we can, that available capacity does not go to waste.

West End Bespoke Tailors (Labour Supply)

Mr. Shepherd: asked the Minister of Labour if he is aware that West End bespoke tailors are refusing overseas orders, largely from the dollar area, because they are unable to obtain sufficiently highly skilled labour; and what steps he proposes to take to deal with this.

Mr. Iain Macleod: Although I have not heard that export orders are being refused I am aware that there is a shortage of skilled workers. My local officers will continue to bring vacanies to the attention of qualified workers registering for employment. There is competition among school leavers for apprenticeships and learnerships with West End bespoke tailors and it is expected that all such vacanies will be filled at the end of the summer term.

Mr. Shepherd: Is my right hon. Friend aware that firms are unable to expand their businesses because of the shortage of labour, while there are at least 200 skilled coat makers who are unemployed


in Italy and who are willing to come over here to work? Will my right hon. Friend try to persuade the trade unions concerned to change what is an obstructive attitude in this matter, and will he also try to get English people interested in this trade, for of thirty-one trainees at present working in London only one is English?

Mr. Macleod: We have surprisingly few vacancies at the London employment exchanges for these people. As for apprenticeships, I am told there are always more applications than there are vacancies. Although there may be difficulties at present, they will be of very short duration. When the summer term ends, my people are confident that all these places will be filled.

Mr. Lee: What is the difference between apprenticeships and learnerships?

Mr. Macleod: I shall have to have notice of that question.

Mr. Shepherd: While there is an adequate number of what we may describe as second-grade coat makers, the grade of workers who produce first-class bespoke work in the West End are just not available.

Mr. Macleod: I have noted the point my hon. Friend has made.

UNDER-DEVELOPED COUNTRIES (INVESTMENT)

Mr. Brockway: asked the Minister of Labour if he will propose to the International Labour Office, through the representatives of Her Majesty's Government, that a convention be prepared for submission to the Governments concerned laying down uniform taxation of profits on investments in colonial and underdeveloped countries with a view to equalising the opportunities of such territories to obtain the capital they require.

Mr. Iain Macleod: No, Sir. The International Labour Office is not the appropriate body to adopt international agreements on this matter.

Mr. Brockway: While the proposal may be new, why should not the International Labour Office deal with matters of capital as well as conditions of

labour? Would it not be greatly to the benefit of Colonial Territories if they did not have competition in capital from different countries, and for Kenya, which has to meet very 'high returns in Northern Rhodesia?

Mr. Macleod: Whatever the merits of that may be, the needs of the territories vary so much that it is inevitable that the taxes raised should vary, too. I think that a substantial contribution towards the idea which the hon. Gentleman has in mind should be made by Part IV of the Finance Bill now going through the House, which enables people to plough back profits without incurring liability to United Kingdom tax.

Oral Answers to Questions — UNITED NATIONS

Emergency Force (Finance)

Mr. A. Henderson: asked the Secretary of State for Foreign Affairs what further contribution is to be made by Her Majesty's Government towards the remaining United Nations Emergency Force costs for 1957.

Mr. Usborne: asked the Secretary of State for Foreign Affairs what instructions have been given to Her Majesty's Government's delegate at the United Nations in respect of finance for the support of the United Nations Emergency Force.

The Minister of State for Foreign Affairs (Commander Allan Noble): As my hon. Friend informed the House on 15th April, the Secretary-General of the United Nations has been empowered to spend on the United Nations Emergency Force up to the end of 1957, 10 million dollars to be raised by assessed contributions from Member States and a further 6½ million dollars to be raised by voluntary contributions. Her Majesty's Government propose to contribute their assessed share, 7·81 per cent., of the first 10 million dollars and a corresponding proportion of the supplementary 62 million dollars, a total of 1,288,650 dollars. The United Kingdom Permanent Representative at the United Nations has informed the Secretary-General accordingly.

Mr. A. Henderson: Is the policy of the Government that the United Nations Emergency Force should be retained on the borders of Israel and Egypt so long


as there is a danger of conflicting interests, and, if so, will they be willing to contribute their fair share of the costs of the Force so long as it is considered necessary to retain it?

Commander Noble: Yes, it is certainly the policy of Her Majesty's Government that the Force should stay in the area as long as it is thought necessary. I think we do pay our fair share.

Mr. Usborne: In view of the fact that the Americans have offered to pay 50 per cent. of the 6½ million dollars required, provided that the other nations together raise the other half, will the right hon. and gallant Gentleman tell us what prospects there are of that other half being subscribed?

Commander Noble: The Secretary-General has not so far published any accounts of other contributions received.

Mr. Beresford Craddock: Will my fight hon. and gallant Friend tell us how the payments in dollars are made? Does it mean the purchase of dollars? How are these transactions carried out?

Commander Noble: These sums ate always quoted in dollars, but in fact we pay part in sterling.

Mr. Beswick: Is not it a fact that part of our liability for the Emergency Force is for equipment supplied by the United Kingdom? Would it not be possible for the United Kingdom, in these special circumstances, to make equipment available without payment, to try to tide the Force over this rather difficult period?

Commander Noble: The hon. Member is quite right. Part of our contribution is for goods and services supplied by the War Office and the Air Ministry. I will certainly consider the point that he has just made.

Mr. T. Williams: Can the right hon. and gallant Gentleman say whether any nation, and if so which, has refused to make a contribution towards this Emergency Force?

Commander Noble: No, Sir. I have not that information.

Mr. Usborne: asked the Secretary of State for Foreign Affairs whether he will propose that the cost of maintaining the United Nations Emergency Force

should be incorporated in the normal United Nations Budget.

Commander Noble: No, Sir. Her Majesty's Government regard the special fund set up by the General Assembly to meet expenditure on the United Nations Emergency Force as the proper source of money for this purpose.
We have, however, consistently maintained that the fund should be financed by assessed contributions from all members of the United Nations.

Mr. Usborne: As it is estimated that for next year, 1958, the cost of keeping the U.N.E.F. going will be in the neighbourhood of 25 million dollars, and in view of the fact that the Soviet Union has apparently said already that it will not pay a cent of that, and that we are already short on last year's payments, how does the Minister of State imagine that this money, without which the U.N.E.F. cannot survive, will be found —or is he not so very anxious that the money shall be found?

Commander Noble: I must say that I rather resent the implication in the last part of that supplementary question. I have said already that the United Nations Emergency Force has the full support of Her Majesty's Government, and we have said so all along; but the United Nations Emergency Force, as its name implies, was set up to deal with an emergency situation, and we think that the present way of funding it is the best. No doubt the Secretary-General himself will produce further suggestions if the money is not available.

Mr. Usborne: Perhaps, then, the right hon. and gallant Gentleman will tell the House at what time the British Government announced they would pay their share of the 6½ million dollars which was required, of which the Americans offered to pay half, and many of us were informed that no offer was made by Britain then?

Commander Noble: If the hon. Gentleman wants that information, perhaps he will put down a Question.

Forces, Korea (Equipment)

Mr. Peyton: asked the Secretary of State for Foreign Affairs if he will make a statement on the decision of the United Nations Command in Korea regarding the provision of modern weapons.

Mr. Beswick: asked the Secretary of State for Foreign Affairs to what extent the decision to equip the United Nations forces in South Korea with more modern arms was considered by the United Nations; whether nuclear weapons are to be included in these new arms; and what representations on this matter have been made by Her Majesty's Government's delegate at the United Nations.

Commander Noble: As was made clear in the statement made by the United Nations Command in the Military Armistice Commission on 21st June, the action now proposed has been made necessary by the continued violations by the Communist side of Article 13 (d) of the Armistice Agreement and the requirement to restore the balance of forces in Korea. There is no intention of abrogating the Armistice Agreement as a whole, and the United Nations Command intends to continue to observe all its other provisions.
The other member countries of the United Nations directly concerned including the United Kingdom were informed in advance of the United Nations Command's intentions. We appreciate the reasons for the proposed action and agree with it. As has been stated by the United States Assistant Secretary of Defence, no atomic weapons are being introduced into South Korea at this time. No representations have been made by the Permanent Representative of the United Kingdom at the United Nations.
I am arranging for copies of the statement made by the United Nations Command in Korea and of a statement made by the American Department of Defence to be placed in the Library of the House.

Mr. Peyton: Can my right hon. and gallant Friend say whether adequate protest has yet been made to the Communist Powers concerning these quite unwarrantable breaches of a highly important Armistice Agreement? Would he not agree that such breaches by the Communists completely poison the international climate and make the task of reaching wider agreement even more difficult and hazardous than it was before?

Commander Noble: I agree with my hon. Friend. Continued representations have been made in the Military Armistice

Commission about such violations, but without avail.

Mr. Beswick: If the forces are beginning to build up again in this part of the world, is it not even more essential that there should be, at any rate, some liaison between what is called the United Nations Command and the United Nations itself? Am I to understand from the right hon. and gallant Gentleman's answer to my Question that there is no consultation at all and no connection at all between the United Nations and this Command which styles itself the United Nations Command?

Commander Noble: No, Sir, it is understood that the United States Government, acting for the United Nations Command, are to make a report shortly to the United Nations.

Hungary (Report)

Mr. Peyton: asked the Secretary of State for Foreign Affairs if he will make the United Nations Committee's report on Hungary available as a White Paper.

Commander Noble: No, Sir. This report will be distributed in the United Kingdom in the form in which it is being printed by the United Nations Organisation, and will be available to hon. Members through Her Majesty's Stationery Office.

Mr. Peyton: Does not my right hon. and gallant Friend feel that to publish this report as a White Paper would give it very much wider circulation and that in refusing to do that he is missing an extraordinarily valuable opportunity to remind public opinion in this country, as well as elsewhere, of the true nature of the Russian power and the cynical brutality with which it suppresses habitually any aspirations for freedom?

Commander Noble: Whilst I agree with the second half of my hon. Friend's supplementary question, I do not agree with the first part. This is a document of about 300 pages, an expensive publication, and I think that a White Paper would not be cheaper. I do not think that the impact of the White Paper would have the same effect in this country as a United Nations publication.

Mr. P. Noel-Baker: Whilst we would agree with the Minister of State that this


report produced as a United Nations document may carry more effect than a White Paper, may I ask whether he will make arrangements to ensure that it will be equally available not only to hon. and right hon. Members but to other members of the public at a very reasonable price?

Commander Noble: I will certainly bear that in mind.

Relief and Works Agency (Refugees)

Dr. Summerskill: asked the Secretary of State for Foreign Affairs whether the United Nations Relief and Works Agency has now received enough new pledges and payments to allow it to operate without cutting its services to the refugees.

Commander Noble: The latest monthly report showed that additional pledges of just over half-a-million dollars had been made since January this year, but that over two million dollars of pledges for the current financial period were still unpaid.
Her Majesty's Government have recently had conversations with Mr. Labouisse, the Director of the United Nations Relief and Works Agency, and I understand that certain of these pledges are now being paid up, but that even so the funds at his Agency's disposal are not sufficient to enable the planned programme to be carried out in full. The Director has therefore made certain deferments and economies which in his opinion do not seriously affect essential basic services of the refugees.
I cannot say what other countries intend to do, but my right hon. and learned Friend announced to the House on 16th May the payments which Her Majesty's Government proposed to make in the twelve months beginning 1st July, 1957. The Director has also been informed that we are prepared to make available an additional 200,000 dollars in this period.

Dr. Summerskill: While thanking the right hon. and gallant Gentleman for that answer, may I ask whether he is aware that the amount U.N.R.W.A. had to distribute was 6d. per refugee per day? Will he give an undertaking that the United Nations contribution will be the maximum that we have hitherto given?

Commander Noble: I do not think that we could be accused of not being forthcoming in this matter, because, as I think the right hon. Lady knows, the United Kingdom and the United States between them have contributed over 90 per cent. of the Agency's income up to date. I had some talks with Mr. Labouisse and I fully agree with the right hon. Lady on the importance of this position.

Dame Irene Ward: Where countries have not paid their contributions, which are so essential for carrying out the programme in connection with refugees, do we broadcast over our information services to the countries that are falling down on their pledges? A little propaganda to these people, to stimulate them to do their job as well as we are doing it, might be effective.

Commander Noble: I do not think that would be a matter for Her Majesty's Government. It would be a matter for the United Nations.

Mr. S. Silverman: Whilst appreciating the absolute necessity of continuing to provide funds for services to refugees, may I ask the right hon. and gallant Gentleman what steps the Government are taking to deal with the question of refugees on a permanent basis, bearing in mind that these refugee services can never be anything more than rough first-aid and ultimately there will have to be a permanent settlement of the refugees and that until that is achieved the situation is good neither for the refugees nor for anybody else?

Commander Noble: Her Majesty's Government are, of course, fully aware of that position and attach great importance to it, but I do not think that the hon. Member would expect me to answer that point in reply to this Question.

Disarmament Sub-Committee (White Paper)

Mr. Beswick: asked the Secretary of State for Foreign Affairs if he will now make a statement as to the disarmament proposals put forward by Her Majesty's Government at the United Nations Disarmament Sub-Committee.

Mr. A. Henderson: asked the Secretary of State for Foreign Affairs how far the support of Her Majesty's Government


for a suspension of nuclear tests is dependent on an agreement for the cessation of future nuclear weapon production.

Commander Noble: Her Majesty's Government, in company with the Governments of Canada, France and the United States, tabled a joint statement in the Disarmament Sub-Committee yesterday, announcing their position with respect to the Soviet proposal of 14th June for a moratorium on nuclear tests. I will, with permission, circulate it in the OFFICIAL REPORT. This statement is now being discussed at the Sub-Committee.
My right hon. and learned Friend has given further consideration to the question of a statement or a White Paper on the current talks. He has come to the conclusion that the best way for him to try to meet the wishes of the House is to issue a White Paper. He proposes to do this in the course of next week.

Mr. Beswick: Whilst expressing satisfaction that after all the hesitations and excuses—[HON. MEMBERS: "Oh."]—it has been found possible to agree to suspension of the tests, is the Minister aware that most of us will hope that the Soviet Union will find it possible to accept the two qualifications which go with this offer of suspension? May I put two questions to the Minister? Firstly, a period of ten months has been mentioned as the period of suspension. May I ask if this is the fact, and would not the Minister agree that it is somewhat inadequate? Secondly, as regards the proposed cut-off, if this is to mean unlimited inspection for limited results, should there not be some additional agreement, ultimately to go on to the complete banning of nuclear weapons?

Commander Noble: First, I share the hope of the hon. Gentleman that the Soviet Government will be able to agree with our proposals. As regards his other two questions. I am sure he will agree that this is a most complicated matter to be dealt with by question and answer, and I hope that he will await the White Paper.

Mr. A. Henderson: May I ask the Minister of State a question arising out of the official statement published this morning? In the event of a partial agreement being achieved, is it intended that

nuclear test explosions shall be suspended forthwith, while steps are being taken to establish a control organ for the purpose of supervising the cessation of production?

Commander Noble: I am afraid that I must give the right hon. and learned Gentleman the same answer, and ask him to await the White Paper.

Mr. Henderson: Does the Minister not know what is in the statement?

Commander Noble: Of course I do, but it is very difficult to deal with these points piecemeal, so I shall be grateful if the right hon. and learned Gentleman will leave the matter.

Mr. P. Noel-Baker: Since everything in this proposal turns on the scheme to be drawn up by the suggested Commission of Experts, will the Minister consider whether, in composing that Commission, it should include some representatives of nations not in the Sub-Committee, in view of the fact that a major purpose is to induce so-called "fourth" nations not to start to make nuclear weapons?

Commander Noble: I am sure that will be considered by both the Sub-Committee and the Disarmament Commission.

Following is the statement:

Oral Answers to Questions — FOUR-POWER STATEMENT ON NUCLEAR TEST EXPLOSIONS

2ND JULY

The delegations of Canada, France, the United Kingdom and the United States welcome the acceptance by the delegation of the U.S.S.R. of the requirement of inspection posts with appropriate scientific instruments, equipment, and facilities, to be set up for the purposes of control and detection of nuclear testing. This is an essential requirement which the four delegations had long proposed and upon which they had insisted. They note that the Soviet Union proposes that these inspection posts should be located within the territories of the U.S.S.R., United States, United Kingdom and Pacific Ocean areas.

Soviet acceptance of this principle now brings within the realm of possibility a temporary suspension of nuclear testing as part of an agreement for a first step in disarmament. This temporary cessation would be subject, of course, to precise agreement on its duration and timing, on the installation and location (with, of course, the consent of the countries concerned) of the necessary controls, including inspection posts, and on its relationship to other provisions of a first stage agreement. These provisions would include the first steps to halt the growth of armaments and to reverse the trend by initial reductions in


armed forces and designated armaments, with the necessary initial measures of inspection, and the cessation of production of fissionable materials for weapons purposes under conditions to be agreed.

The four delegations propose that a group of experts under the direction of the five delegations meet on …(date) to proceed with the design of the inspection system to verify the suspension of testing and that the chairman of the five delegations proceed with the consideration of the necessary relationship of this provision for the temporary suspension of nuclear testing to the other provisions of the first stage disarmament agreement.

Algerian Refugees, Tunisia

Mr. Benn: asked the Secretary of State for Foreign Affairs if Her Majesty's Government will offer to help for the relief of the Algerian refugees in Tunisia; and whether he will seek the co-operation of the appropriate United Nations agencies in this matter.

The Joint Under-Secretary of State for Foreign Affairs (Mr. Ian Harvey): Her Majesty's Government have noted with concern the increasing number of Algerian refugees in Tunisia. They understand that the French Government have offered help and assistance through the International Red Cross. The Red Cross have asked their representative in Tunisia to see what help that body can give; and the United Nations High Commissioner for Refugees has sent a special representative to investigate the situation on the spot.
Until the results of these inquiries are known, no firm conclusions can be reached on the matter.

Mr. Benn: Is the hon. Gentleman aware that French troops in Tunisia have been attempting to drive the Algerian refugees back into Algeria, and that in firing on them they also fired on and wounded representatives of the Tunisian Government who went to protest about it? Is he aware that the whole situation on the Algerian-Tunisian border is in many ways as tragic as was the situation on the Hungarian-Austrian border—[HON. MEMBERS: "Oh."1—and will he please take up the matter seriously, as a representative of the Tunisian Government, Mr. Mongi Slim, who was a member of the United Nations Commission investigating the Hungarian situation, has now appealed to the United Nations to protect his own country?

Mr. Harvey: Her Majesty's Government are fully aware of the difficulties

of the situation. I should like to say, with respect, that I do not think the hon. Gentleman's supplementary questions have helped it very much. We shall await the reports, and as soon as we receive them we shall consider how effectively we can help.

TRADE WITH RUSSIA AND CHINA

Mr. Swingler: asked the Secretary of State for Foreign Affairs how far, following the unification of the Soviet and Chinese embargo lists, it is still his policy to make exceptions to the export embargo in appropriate circumstances.

Mr. Ian Harvey: Our use of the exceptions procedure for exports of goods under embargo for China up to 30th May, 1957, applied to items which were not restricted for export to the Soviet bloc. There is no comparable procedure for items on the Soviet bloc list, with which the China list has now been equated. As my right hon. and learned Friend explained on 13th May, no exceptions have been made to permit the export of embargoed goods on the Soviet bloc list unless the circumstances were very special or only trifling amounts were involved.

Mr. Swingler: Would not the Joint Under-Secretary of State agree that the exceptions procedure has been very valuable in maintaining some flexibility in the development of trade and in negotiations in the case of the China list? Would it not be a good thing, considering that many items on the list are not commonly regarded as military items at all, to extend this procedure now in relation to both the Soviet Union list and the China list?

Mr. Harvey: The Soviet bloc list was drastically curtailed in 1954, and carefully drawn up, and I do not think that at this point there is any necessity to make use of that procedure.

GIBRALTAR (FRONTIER RESTRICTIONS)

Mr. G. Jeger: asked the Secretary of State for Foreign Affairs what reply he has received to his note of 16th April


to the Spanish Government on the subject of Gibraltar frontier restrictions.

Mr. Ian Harvey: None so far. Further discussions on this subject have, however, been initiated with the Spanish Government.

Mr. Jeger: Is the hon. Gentleman aware that there is considerable feeling in Gibraltar that their interests have been overlooked by Her Majesty's Government, and will he at least send a reassuring message to that loyal Colony to say that he is going into the matter? Further, would he consider sending an all-party committee of inquiry to Gibraltar to look into the question of the frontier, because it is obvious that the reports he, or Her Majesty's Foreign Office, are getting differ very much indeed from the actual situation on the frontier?

Mr. Harvey: The hon. Gentleman has given me a good deal of information about this, which I have very carefully considered and which forms part of the new approaches. With regard to the assurance he asks for, this was given in the Adjournment debate when he raised the matter himself. As to the question of an all-party delegation, I think this does not arise at the moment.

RADIO AND TELEVISION BROADCASTS (EXCHANGES)

Mr. A. Henderson: asked the Secretary of State for Foreign Affairs what consultations have taken place between Her Majesty's Government and the United States Government with a view to proposing to the Soviet Government the regular exchange of uncensored radio and television broadcasts.

Mr. Ian Harvey: We have been in touch with the United States Government through the normal diplomatic channel.

Mr. Henderson: In view of the fact that an interview with Mr. Khrushchev was shown recently on television in this country without any attempt being made to censor it, would it not be a good thing if an arrangement could be made on reciprocal basis with the Soviet Union for the regular exchange of television and radio broadcasts?

Mr. Harvey: This is obviously a matter of considerable importance which has to

be looked at. It is important to look at the question of reciprocity in these matters, and we are going into it with great care.

HONG KONG (CHINESE NATIONALIST AIRCRAFT)

Mr. Rankin: asked the Secretary of State for Foreign Affairs what reply has been sent by the British Chargé d'Affaires in Peking to the protest of the Chinese Foreign Ministry against the permission granted by the Hong Kong authorities on 22nd March, for the shipment of the Nationalist jet fighter aircraft which landed at Kaitak on 31st January, 1956.

Mr. Ian Harvey: Her Majesty's Chargé d'Affaires at Peking has replied to the Chinese protest of 22nd June that, as has been previously stated, it is normal international practice that, if a military aircraft infringes the airspace of another country and lands there in the absence of hostile intentions towards the latter, or of recognition of a state of belligerency, the aircraft and crew should be allowed to return. I will, with permission, circulate the full text of the reply in the OFFICIAL REPORT.

Mr. Rankin: Could the Joint Under-Secretary of State say at the moment whether or not this machine was engaged in a training flight, or was it on operational work, and can he say if it is one of the machines which indulge in attacks in that part of the ocean, in the Straits of Formosa, on peaceful shipping?

Mr. Harvey: The aircraft was unarmed.

Mr. Rankin: On a point of order, Mr. Speaker. Can the Minister inform the House how a military jet aircraft can be unarmed?

Mr. Speaker: Order. That is not a point of order.

Following is the reply:—
The Office of Her Britannic Majesty's Chargé d'Affaires present their compliments to the Ministry of Foreign Affairs and have the honour, under instructions from Her Majesty's Principal Secretary of State for Foreign Affairs, to make the following communication in reply to the Ministry's Note of 22nd June concerning the Chinese Nationalist aircraft which landed in Hong Kong on 31st January, 1956.


As was stated in the Note from Her Britannic Majesty's Chargé d'Affaires of 12th March, 1956, Her Majesty's Government gave careful study to the circumstances surrounding the landing of this aircraft and to the representations made by the Chinese Government. As was then stated, it is normal international practice that, if a military aircraft infringes the air space of another country and lands there in the absence of hostile intentions towards the latter or of recognition of a state of belligerency, the aircraft and crew should be allowed to return. In accordance with this practice, the pilot was allowed to return to Formosa in accordance with his expressed wish. As there were doubts about the serviceability of the aircraft, it was dismantled and stored, and it has since been returned to Formosa by sea.
As has been previously stated, Her Majesty's Government have no intention of permitting Hong Kong to be used as a base for hostile activities against anyone and they wish again to make it clear that, if in future it is considered that facilities there are being deliberately abused, the Hong Kong Government will hold itself free to take whatever action it deems necessary to deal with such abuse.

COUNCIL OF EUROPE (RECOMMENDATION ON FERTILISERS)

Mr. Willey: asked the Secretary of State for Foreign Affairs whether the Organisation for European Economic Co-operation has replied to the Council of Europe on the question of the increased cost of fertilisers.

Mr. Ian Harvey: Not yet, Sir. The Recommendation is under urgent consideration by the Organisation for European Economic Co-operation and has been referred for examination to the Committee of Deputies of the Ministerial Committee for Agriculture and Food. Her Majesty's Government will do everything possible to ensure that no undue delay occurs in consideration of the Recommendation by the Organisation for European Economic Co-operation.

Mr. Willey: Whilst appreciating that expression of intention, does the Joint Under-Secretary also appreciate that if the Council of Europe is to be more effective, we have to seek a more speedy implementation of its decisions? Secondly, if we are to strengthen the relationship between the Council of Europe and O.E.E.C. we must have a more speedy response from O.E.E.C.

Mr. Harvey: I have indicated that we are pressing this matter as hard as we can.

SYRIAN BORDER AND GAZA AREA (INCIDENTS)

Mr. Janner: asked the Secretary of State for Foreign Affairs whether he is aware of the renewal of Syrian border attacks on Israel, and of Arab fedayeen activities in the Gaza area; and if he will therefore make representations to the parties concerned condemning these activities, in view of the danger which they constitute to peace in the Middle East.

Commander Noble: I have seen conflicting reports from both Israel and Syrian sources of recent incidents on the Syrian borders and reports from Israel sources of recent incidents in the Gaza area. So far as we are aware no investigation by United Nations observers has been requested by either side and no independent report is therefore available. The United Nations representatives in the area are, of course, aware of the situation, and the parties concerned, as members of the United Nations, can if they think fit refer the question to the Mixed Armistice Commission or the Security Council. I do not think on the evidence available that Her Majesty's Government have any special status for unilateral intervention as suggested, and we are in any case not in diplomatic relations with the Syrian or Egyptian Governments.

Mr. Janner: As very serious incidents of this nature have been taking place and only a few days ago they resulted in a death, and as the murderers and pillagers are coming across the Israeli borders, does not the right hon. and gallant Gentleman think it important for him to bring the matter to the attention of the United Nations to see what can be done to remedy the situation?

Commander Noble: I am sure that those on the spot, if they think fit, will do as the hon. Gentleman suggests.

AIRCRAFT INCIDENT, BULGARIA (COMPENSATION)

Mr. Janner: asked the Secretary of State for Foreign Affairs if he is aware that the Bulgarian Government have not yet paid compensation to the relatives of the British passengers in the Israeli aeroplane which was shot down over its territory in 1955; what steps he has taken to press for this compensation to be paid; and with what result.

Mr. Ian Harvey: The answer to the first part of the Question is "Yes, Sir." Since the submission of the claim for compensation for the relatives of the United Kingdom citizens killed in this accident, representations have been made to the Bulgarian Government on several occasions, but with no result.
The claim was submitted on 12th March, 1956; Her Majesty's Minister at Sofia raised the matter with a Vice-Minister in the Bulgarian Ministry of Foreign Affairs on 21st August, 1956; on 31st January, 1957, he addressed a strong Note to the Bulgarian Government asking for proposals for a settlement as a matter of urgency; and on 15th March, 1957, he again took the matter up with a Vice-Minister in the Bulgarian Ministry of Foreign Affairs.

Mr. Janner: Does not the hon. Gentleman think it is a matter of very serious gravity that two years afterwards no compensation has been paid, in spite of the promise made at the time, to the relatives of the victims who were brought down in a murderous manner without any excuse? Does he not think that pressure should be brought to bear continuously and as effectively as possible on the Bulgarian Government to get compensation for those concerned?

Mr. Harvey: The Bulgarian Government have gone back on their original promise. The question of bringing effective pressure to bear on them involves a certain number of difficulties.

CYPRUS (CONCILIATION OFFER)

Mrs. L. Jeger: asked the Secretary of State for Foreign Affairs if he will make a statement on the progress of the North Atlantic Treaty Organisation's conciliation efforts on the question of Cyprus.

Commander Noble: The offer of conciliation in the Cyprus question was made not by the North Atlantic Treaty Organisation as such, but personally by the Secretary-General in accordance with the resolution adopted unanimously at the North Atlantic Treaty Organisation Ministerial meeting in December, 1956. Any progress report is therefore a matter for Monsieur Spaak.

Mrs. Jeger: Cannot the House be informed whether any talks have taken place or whether there is a complete standstill, especially as it has been told that any political settlement in Cyprus must await a report of the N.A.T.O. effort?

Commander Noble: I am afraid that I have nothing to add to the original answer.

Mr. J. Griffiths: Since it appeared when the statement was made by the Secretary of State for the Colonies in the debate on Cyprus that Her Majesty's Government attach great importance to it, are we to assume from the reply that the effort on behalf of N.A.T.O. has completely failed and that we must take a fresh initiative?

Commander Noble: No, Sir; I do not think the right hon. Gentleman can draw those conclusions. We still attach great importance to it.

Oral Answers to Questions — EGYPT

Suez Canal

Mr. Edelman: asked the Secretary of State for Foreign Affairs what action he proposes taking in view of the fact that the closing of the Suez Canal to other shipping in order to permit the passage of a submarine, or submarines, is a breach of Article 1 of the 1888 Convention, which forbids interference with the free use of the Canal.

Commander Noble: I am aware that according to a news agency report the Egyptian Suez Canal Authority announced its intention of closing the Canal on the night of 22nd June. We have no evidence that the closure in fact took place or that the alleged closure was connected with the passage of submarines through the Canal.

Mr. Edelman: Do not the Russians appear to be doing some very curious and mischievous things in the Mediterranean, including sending warships through the Canal for the first time in forty years? Is it not also the case that on the night of 26th June a Russian cruiser and three destroyers passed through the Straits of Gibraltar on their way to the Eastern Mediterranean? Will the right hon. and gallant Gentleman confirm that the Suez Canal will not be


closed on any occasion through the intervention of these Russian warships?

Commander Noble: I am afraid that I cannot answer the last part of the hon. Gentleman's supplementary question, but I agree with what he said in the first part, which was answered last week by my right hon. Friend, that these are indeed disturbing events.

Mr. G. R. Howard: Can my right hon. and gallant Friend say what steps Her Majesty's Government are taking to satisfy themselves that such things as these are not in direct contravention of the 1888 agreement?

Commander Noble: If we were sure that such things had taken place, we should certainly examine that point.

Mr. S. Silverman: Can the right hon. and gallant Gentleman explain to the House exactly what contravention of the 1888 Convention might be involved? Does not the Convention specifically provide for the free passage of war vessels through the Canal?

Commander Noble: As I said, if I were sure that this had taken place I should examine it and see whether an infringement had occurred.

Sir L. Ropner: Does not my right hon. and gallant Friend agree that the action of the Suez Canal authority in suspending traffic through the Canal on a number of occasions in recent weeks is a breach of the 1888 Convention?

Commander Noble: There are, as my hon. and gallant Friend knows, many other administrative and more legitimate reasons for a temporary closure of the Canal, such as maintenance or the clearing of a wreck.

Expelled British Nationals (Claims)

Mr. Remnant: asked the Secretary of State for Foreign Affairs whether he will make an interim payment to British nationals expelled from Egypt on account of claims lodged.

Commander Noble: Her Majesty's Government have every sympathy for British nationals evacuated from Egypt and have already made substantial payments through the Resettlement Board for the interim relief of hardship. We are

now considering extending the definition of "hardship" to include hardship arising from prolonged deprivation of assets. I understand that a statement will be made shortly.

Mr. Remnant: Is not my right hon. and gallant Friend aware that in March an undertaking was given by the Joint Under-Secretary to make releases from the blocked accounts in the United Kingdom of former British residents and institutions, but no such releases have been made? Will he make the most urgent representations to the Treasury?

Commander Noble: I fully realise that my hon. Friend and other hon. Members feel deeply about the matter, as do Her Majesty's Government, and I ask my hon. Friend to await the statement which will be made shortly.

Mr. P. Noel-Baker: While we all welcome what the Minister of State has said, might I assure him that if the Government can do something more to alleviate the great hardship of these British subjects, who have suffered through no fault of their own, they will have general support?

Commander Noble: I am grateful to the right hon. Gentleman.

Captain Waterhouse: Will my right hon. and gallant Friend bear in mind that it is now some six or seven months since this tragedy took place, and throughout history have not British Governments always had a reputation for looking after their own nationals? Will he give a definite assurance that the consideration of which he speaks will be an urgent one and that we shall have an announcement before the House rises for the summer Recess?

Commander Noble: I made it clear that a statement would be made shortly. It will certainly be before the House rises for the Recess.

British Subjects (Trial)

Mr. P. Williams: asked the Secretary of State for Foreign Affairs whether he will make a statement on the trial of a number of British subjects in Cairo.

Mr. Ian Harvey: Four British subjects, who were arrested last August and September, were recently tried in Cairo


on charges of alleged espionage, and four others were tried in their absence on similar charges. Of the eight, five were acquitted and three—one in absentia—were sentenced to terms of imprisonment of five and ten years. The acquitted men are now safely back in this country.
So far as the two men imprisoned in Cairo are concerned, I understand that the period during which appeals may be lodged does not expire until 10th July, and until then the case should be regarded as still being sub judice.
The Swiss authorities in Cairo have throughout done their best for these men, and succeeded in ameliorating their conditions of detention in many ways. The men and their families have for their gratitude to be expresed to the Swiss authorities; in which I am sure the House will wish to share.

Mr. P. Williams: In view of the supplementary question put by my right hon. and gallant Friend the Member for Leicester, South-East (Captain Waterhouse) a few moments ago, cart my hon. Friend say what action is being taken by the British Government to ensure the safety, life and limb of the two British subjects presently in gaol in Cairo?

Mr. Harvey: Yes, Sir. As I stated, this matter is sub judice at the moment

but we are considering what action is most likely to help the men who are now in prison.

BILL PRESENTED

FEDERATION OF MALAYA INDEPENDENCE

Bill to make provision for and in connection with the establishment of the Federation of Malaya as an independent sovereign country within the Commonwealth, presented by Mr. Lennox-Boyd; supported by Mr. Alport and Mr. Birch read the First time; to be read a Second time Tomorrow and to be printed. [Bill 107.]

SCOTTISH ESTIMATES

Committee of Supply discharged from considering the Estimates set out here-under and the said Estimates referred to the Scottish Standing Committee:

Class III, Vote 18, Approved Schools, Scotland.

Class IV, Vote 14, Public Education, Scotland.

Class V, Vote 10, Department of Health for Scotland.

Class V, Vote 12, Housing, Scotland.—[Mr. R. A. Butler.]

Orders of the Day — FINANCE BILL

Considered in Committee [Progress, 2nd July.]

[Sir GORDON TOUCHE in the Chair]

New Clause.;—(REDUCTION OF PURCHASE TAX FROM FIVE OR TEN PER CENT. TO ONE PER CENT.)

(1) The enactments relating to purchase tax shall have effect as if in Part I of the Eighth Schedule to the Finance Act, 1948 (as amended by Treasury orders under section twenty-one of that Act and in particular by the Purchase Tax (Consolidation) Order, 1956), a rate of tax of one per cent. were substituted for any rate of five per cent. or ten per cent.

(2) This section shall have effect as from the sixth day of August, nineteen hundred and fifty-seven.—[Mr. Jay.]

Brought up, and read the First time.

3.32 p.m.

Mr. Douglas Jay: I beg to move, That the Clause be read a Second time.

The Deputy-Chairman: It might be convenient to discuss with this new Clause the new Clause, "Reduction of purchase tax from thirty per cent. to fifteen per cent", and the new Clause, "Reduction of purchase tax from fifteen per cent. to five per cent", both in the name of the right hon. Member for Huyton (Mr. H. Wilson).

Mr. Jay: I agree that it is convenient to take this group of new Clauses together.
The Government have a real chance here to do something practical to stop the new rise in living costs which is beginning. We therefore strongly press these Clauses on the Government, particularly the proposed relief in the 5 per cent. and 10 per cent. rates of Purchase Tax. A new round of inflation appears to be beginning and there is every sign that it will continue, unless the Government do something definite about it. All the evidence is that way.
At present, the Government are adding to the inflationary tendencies rather than doing anything to check them. A cut in Purchase Tax would at least countervail the other rises in the cost of living which are now threatened in rates, rents, food prices, and in the new National Insurance

contribution and all the other burdens which are being imposed by the Government on housewives, and which have completely brought to an end the so-called plateau of prices, such as it was, of last year.
If the Government acted on this group of new Clauses, a real contribution to preserving the value of the £ would be made. The group covers the 5 per cent., 10 per cent., 15 per cent., and 30 per cent., rates of Purchase Tax and includes the following household goods and necessities, to mention a few, which are now subject to tax: clothing, boots and shoes, many textile fabrics, floor coverings, wallpaper, furniture, and many domestic appliances, including sewing machines, commercial vehicles, cutlery, brushes and combs, razors and razor blades and last, but not least, soap.
I do not know whether the Chancellor and the Economic Secretary realise that the Government are still imposing tax on ordinary domestic soap. I recall that Lord Chandos, when in opposition, used to argue with great vehemence that it was the last form of iniquity of a really depraved Government to impose tax on soap and that is one of the forms of tax which we are discussing. Over a very wide range of goods, especially with clothing, boots and shoes and furniture, Purchase Tax has been extended by the Government to a large number of goods which were not subject to it previously.
Under the Labour Government, 80 or 90 per cent. of clothing, boots and shoes, and many textile materials and a large proportion of furniture products were entirely exempt from tax. Far more things in this range are now being taxed than were before. I recall that Mr. Peake, as he then was—he is now Lord Ingleby—promised from this Box, in 1950, that under a Tory Government Purchase Tax would be removed from everything except a few luxuries. That proves once again the never-ending dishonesty of the party opposite. I include the whole lot. I am not suggesting that any one is worse or better than the other.

Mr. Hector Hughes: May I draw your attention, Sir Gordon, to the expression that my right hon. Friend has just used? He said that the party opposite was guilty of dishonesty. I was ruled out of order when I used that word yesterday.

The Deputy-Chairman: I cannot discuss what happened to the hon. and learned Member yesterday.

Mr. Jay: As I was saying, it may be the case that this rash promise of Lord Ingleby led to his being translated to another place and that may be a warning to the Chancellor not to make so many romantic promises.
As a result of imposing this tax on so many more household necessities, the Government have raised the Purchase Tax burden on the public from £300 million total revenue in 1951 to £462 million in the present year. That is what the Chancellor calls reducing taxation. Indeed, even after the small Purchase Tax cuts in this Budget, of which the Chancellor has been boasting, by his own estimates, in page 27 of the Financial Statement, he expects the revenue from Purchase Tax this year to be higher than the actual receipts from the tax last year. More and more is being taken from the housewife by the Government in Purchase Tax with every year that goes by.
The Chancellor made one of his romantic speeches in this very Committee the other day when he said that taxes were too high and ought to be reduced. He said that Purchase Tax was too high and ought to be reduced, and the Press took him seriously for once. Here is his chance to do something practical upon those lines by accepting the new Clauses, or a substantial part of them. If the Chancellor goes around saying that taxes are too high and that he means to reduce them, and then, in practice, does nothing about it, he will not please the public; and it may be that he will not please the Prime Minister very much either. If he goes on making these rash promises he may suffer the fate of Lord Ingleby and also be translated to another place. In that sense, there is "plenty of room at the top."
As it is, to take one example, the manufacturers of commercial vehicles are recalling what the Chancellor said about this tax in one of his more remarkable speeches in the debates in 1950. The hon. Member for Kidderminster (Mr. Nabarro) quoted some of those remarks in a debate the other night and I am sure that he will be giving us warm support this afternoon in seeking to bring about these reductions.
I will only remind the Economic Secretary that the Chancellor, on 15th June, 1950, said of the Purchase Tax on commercial vehicles:
We think that it is a very bad thing. We think it is a most extraordinary thing to impose Purchase Tax upon capital goods of industry, such as these vehicles are.
He went on, even more enthusiastically, to say:
It is a vicious and vindictive tax which is calculated to hit at the small man particularly.…It is a tax on capital goods.
The Chancellor seemed to take a remarkably light-hearted attitude in his past speeches upon these subjects. I think that what I said on that occasion showed a little more caution than did the Chancellor's words. I commend what I said to the Economic Secretary:
this tax is not intended to be permanent…but is needed only as long as the necessity for restraint on our investment programme"—
which was, naturally, great in 1951—
and the maximum of exports are paramount."—[OFFICIAL REPORT. 15th June, 1950; Vol. 476, c. 567–81.]
We should like to hear something about the Government's attitude to this tax on commercial vehicles in the changed circumstances of today.
It is no use the Chancellor or the Economic Secretary telling us that he would like to do all this, but that he just cannot afford it now because the Government have made so many other concessions. Compared with hon. Members opposite, in these debates we have been remarkably candid in opposing the large tax reliefs which, in the words of the present Lord Privy Seal, the Chancellor has "given away" both in Surtax concessions and on the profits of the overseas trade corporations. Let the Government now decide to give this away, or a substantial part of it, to the housewife, by way of Purchase Tax reliefs and so do something really practical to stop the new round of inflation which is threatening us.
The Government have no policy for restraining the rise in the cost of living and preserving the value of the £. Here, at least, is something practical which they can do and which will be a great contribution. I hope that the whole Committee, regardless of party, will join together as it did yesterday in the matter of building societies' profits and press this matter irresistibly.

3.45 p.m.

The Economic Secretary to the Treasury (Mr. Nigel Birch): I rise not with any desire to curtail the debate, but to make two rather short points which may be worth making now. Clearly, all taxation is unpopular. To tax and to please is given to no man. Purchase Tax is a particularly unpopular tax, which all Chancellors would like to reduce if they could. The new Clauses, however, would be very expensive. The first would cost £46 million; the second, £60 million; and the third. £16 million. If, as I understand, Sir Gordon, you are calling certain subsequent new Clauses also, the total cost involved in the proposed new Clauses tabled by hon. Members opposite would be £157 million. That is a very large sum indeed.
The right hon. Member for Battersea, North (Mr. Jay) put these proposals forward as a cure for inflation, but I must own that I think he is being a little heretical. His master, the right hon. Member for Bishop Auckland (Mr. Dalton), once defined inflation as "too much money chasing too few goods "Under the Clauses, the amount of goods would stay the same, but the amount of money chasing them would increase by £157 million. I should have thought that that was an assignment with inflation if ever there was one.

Mr. Jay: Does the Economic Secretary really think that holding up the cost of living is doing something to check inflation? If he does, it is a very poor lookout for the country.

Mr. Birch: I would point out to the right hon. Gentleman that Purchase Tax was kept on by his Government for the very same reason that it is kept on by ours. We believe that it is one of the measures that we can take against inflation.
When introducing his Budget, my right hon. Friend calculated that on fairly austere principles he could perhaps remit £100 million of taxation, and part of that sum he put to remitting Purchase Tax upon household goods. But he went as far as he thought he could go. We believe that there can be no question of going further, to the tune of £157 million.

Mr. Hector Hughes: Before I offer my observations to the Committee, Sir Gordon may I ask whether we are taking

the proposed new Clause, to reduce the 60 per cent. rate of Purchase Tax, with the others?

The Deputy-Chairman: We are taking the proposed new Clauses to reduce Purchase Tax from 5 per cent. or 10 per cent. to 1 per cent.; to reduce it from 30 per cent. to 15 per cent.; and to reduce it from 15 per cent. to 5 per cent.

Mr. Hughes: Are we also taking the proposed new Clause which seeks to exempt musical instruments?

The Deputy-Chairman: We are not taking that.

Mr. Frank Beswick: We appreciate the brevity with which the Economic Secretary made his point, but not the substance of it. If it is impossible to go any further in the way of concessions, the first question that springs to our minds is why it was possible to go any distance at all by way of tax concessions to those earning between £2,000 and £10,000 a year. If it were so very important to stop this money chasing goods, surely money in the hands of those people is just as bad as it is in the hands of the ordinary consumers, who find it very difficult to buy these essential commodities.
The Economic Secretary talked about the necessity for curbing inflation, but does he really think that trade union leaders will listen to any talk about planning on the wages front while they see, on the other hand, the continuance of this kind of tax upon essential commodities? It is no good the Economic Secretary expressing indignation or impatience. Of course, this matter is not directly mentioned in the new Clause with which we are dealing, but it is very closely bound up with it.
The sooner the right hon. Gentleman realises that to the ordinary consumer and worker this tax on essentials, together with the subsidies on essential foodstuffs, should be the absolutely first consideration in regard to any resources that we have, the better. Purchase Tax should come off, and the food subsidies should stay on.
I listened very carefully to the earlier debates we had on Purchase Tax, and I must say that I have never felt so frustrated when listening to a debate on that tax as I did then. I cannot think that


there is any enthusiasm at all on either side of the Committee for this kind of tax. We are all losing patience with it. I am not now speaking about any question of relief in the total amount of taxation, but I am speaking of it as a method, and, as a method of collecting revenue, it is, surely, now discredited on both sides of the Committee.
It is a fact, of course, that in the Bill some concessions have been made, and the Economic Secretary reminded us of them. He said that, when the Labour Governments were trying to stop money chasing too few goods, we retained the Purchase Tax, but it is fair to remind him that we did not retain it on many of these articles which are now subject to tax. Many of these things are now being taxed by the present Government for the very first time either during or since the war.
The retailers and trading community of the country come into this as well as the consumer. In the autumn of 1955 we had these taxes imposed. The Government are now removing half of them, or half of them on a limited range of the goods which were newly brought into the tax range. What does the Economic Secretary think is happening to those goods which are still on the shelves of the retailer, on which tax has been paid, and which he still has to sell after this reduction?
Time after time, there have been deputations to the Treasury about some form of rebate on these articles on which the tax has been paid by the retailers but subsequently reduced. Of course, we have always had the reply that it is quite impossible to devise any water-tight system within which the rebate could be given. But the very fact that it is impossible to provide a workable rebate is surely another argument against retaining Purchase Tax at all.
I want to emphasise what was said by my right hon. Friend the Member for Battersea, North (Mr. Jay). If we are to have a general standstill in prices, and if we are to make any impression upon the trade union leaders—

Mr. Ellis Smith: A standstill only for the engineers.

Mr. Beswick: —and if we are to convince housewives that we are trying to get a genuine "plateau," then the very first thing we ought to do is to take the Purchase Tax off such items as electric light bulbs.
What happens in someone's home if an electric light bulb goes? One cannot just sit there in the dark thinking one is combating inflation, because one cannot afford to go out and buy another bulb. Of course, people have to replace items of that kind. Now, even after some reductions there is still a tax upon essential articles such as electric light bulbs at a time when the Government are giving away so much money to the higher income groups.
I plead with the Economic Secretary to try and appreciate the state of mind which is created among consumers and workers when they see this policy being put into operation. I hope that he will, in an intervention of somewhat greater length, be able to tell us, first, that he so abhors this indirect system of taxation, the Purchase Tax in particular, that the Government will make every effort to end it, and that, before ending it completely, they will, at any rate, remove the tax on these essentials on which, both during and immediately after the war, no tax at all was levied.

Mr. E. Shinwell: The Economic Secretary, in reply to the observations of my right hon. Friend the Member for Battersea, North (Mr. Jay) about the desirability of reducing, if not abolishing, Purchase Tax, spoke with commendable brevity. He made two short points which amount, really, only to one, namely, the argument that the Government cannot afford either to reduce or abolish the Purchase Tax because it would be far too expensive. It would cost, according to the right hon. Gentlemen, about £150 million annually.
In reply to the Economic Secretary, want to ask this question, a perfectly fair one, I think, which deserves some response. Would it really be a bad thing if the Government were not provided with £150 million to spend as and when they liked? For example, if they had £150 million less, they might refer the matter to the Minister of Defence, and he might revise his defence programme and curtail defence expenditure. Would that do us


any harm? Of course not. The Government might curtail their normal expenditure, in response to demands made by hon. Gentlemen opposite. I cannot for the life of me understand the validity of an argument which, in effect, says, "Do not deprive us of £150 million because, if you do, it will be impossible for us to carry on".
The other argument is that if we reduce Purchase Tax or, indeed, abolish it to the extent called for by my right hon. Friend in moving the new Clause, and £150 million which, ordinarily, because of the Purchase Tax, would go into the coffers of the Government remains in the pockets of the consumers, that would lead to inflation. I have often tried to find out what "inflation" really means. I understand that it may be put something like this. If people are given too much money and there are not sufficient goods available, that leads to inflation.
What is the difference, so far as inflation is concerned, between giving the £150 million to the Government and giving it to the consumers of the country? If the Government get the money, it leads to inflation; they have too much money. On the other hand, if one gives it to the consumers of the country, that leads to inflation; they have got too much money. I am bound to say that, if there is £150 million available, I would prefer to give it to the consumers rather than to the Government.
I want to address myself to what I regard as the crux of the problem. I have not taken part in these financial debates because, quite frankly, I am not an economic expert. Indeed, I am very grateful that I am not, because there is less confusion in my mind than appears to exist in the minds of the economic experts. They hardly ever agree. They are like doctors and, if I may say so with the highest respect, like barristers. They hardly ever agree. One listens to the debates on the Finance Bill and the Budget, in the House and in this Committee, and one hears scores of varied arguments, most of which cancel each other out. In the end, we do not know where we are.
What we are concerned with, above all, as I think hon. Members generally will agree, is how to reduce the cost of

living. That is not a party matter; it is a matter of general concern. It is vital. It is fundamental. Unless we can successfully tackle the problem of how to reduce the cost of living, which, apparently, has baffled the minds of Governments for years, at any rate, since before the last war, then we are bound from time to time to have the wage demands which are resented by some hon. Members.
Indeed, they are not too well liked even by those who make them. Wage demands have to be made because of increases in the cost of living. It is no use cavilling about people making wage demands, or criticising trade union leaders because they seek to uphold the standard of living of their members. That is a lot of nonsense and does not lead us anywhere.
4.0 p.m.
How are we to reduce the cost of living? Do the Government know? During the past few years I have not heard in the House of Commons a single constructive proposal by any member of the Government which would lead me to believe that at last a solution had been found for reducing the cost of living.

The Deputy-Chairman: I am sorry to interrupt the right hon. Gentleman, but I must point out that the proposed new Clause is confined to the Purchase Tax.

Mr. Shinwell: I am grateful to you, Sir Gordon. That is precisely the point I am coming to. It was necessary for me to lead up to it.
Before I come to that point—if I have your good will—I would observe that even on this side of the Committee occasionally—I regret having to say it and there is nothing I deplore more than having to say it—when we demand that there should be reduction in the cost of living we do not present any constructive proposals except to say, "Reduce Purchase Tax," or "Curtail expenditure." Then, of course, we sometimes say, "Increase expenditure." So what does it matter? There is a great deal of confusion, uncertainty and lack of knowledge about it. I do not pretend to be able to postulate any kind of solution.
I come to the point of the new Clause. Here is an opportunity of reducing the cost of living by reducing the Purchase Tax. On the assumption—it may not be


a very well-founded assumption, but it is worth trying—that manufacturers, wholesalers and retailers of consumer goods will "play ball" and will not take advantage of the reduction in Purchase Tax to boost or to maintain prices, this is obviously one means of reducing the cost of living. A simple illustration is that if, instead of having to pay £20 for some household requirement I want, I pay only £15 or £16, there is an improvement in the cost of living for myself. That applies all round.
How can the Government say that this is not one means of reducing the cost of living? Of course it is. If they reject it I am bound to say with the utmost good will that they are bereft of any constructive solution. A Government should not be placed in that embarrassing position. We want to reach out to achieve a constructive solution of this very vital problem.
Now is the time, even if it means depriving the Treasury of £150 million. £100 million, or even of £50 million, to take this action. It is far better for it to be deprived of that money than for us to miss an opportunity of reducing the cost of living. That is why I support the proposed Clause.

Mr. Clement Davies: The Economic Secretary, in his short intervention, made the statement, with which everybody agrees, that all taxes are unpopular. He added that Purchase Tax was particularly unpopular.
I agree; this is a bad tax. I do not think it could have been introduced at any time except during war. I doubt very much whether it would have been introduced by any Chancellor of the Exchequer in peace, or could ever be continued except in a time of full employment. If there came a period of unemployment of any considerable extent one of the first things that would have to be tackled is the doing away with the Purchase Tax. The tax is wrong in its conception.
I remember criticising the tax when it was introduced by the late Sir Kingsley Wood in his war Budget, in 1940. It was introduced to stop the manufacture of luxury goods, and it was confined largely to luxury goods in those days. Its other purpose was to turn the minds of manufacturers to the making of essential goods,

particularly those needed for war purposes. The money to be saved by discouraging the purchase of luxury goods could have been invested in war savings, so helping to win the war. That is how Purchase Tax started.
The range of Purchase Tax increased, and after the war, in conditions of full employment, it was put not only upon luxury goods but upon ordinary every-day articles. It started as a 33¾ per cent. tax and went up in some cases to as much as 100 per cent. That is why one objects to it. It certainly has affected our export trade, which is cushioned upon our home trade. If inland trade is discouraged we find it much more difficult to build up exports. The tax also discourages production. It has a double economic effect.
I agree with what was said by the right hon. Member for Easington (Mr. Shinwell). One of the first effects of the tax is to reduce purchasing power, particularly that in the hands of the housewife, and that affects the whole market. The worker finds that he is not earning enough and then, as the right hon. Gentleman rightly pointed out, the worker asks for an increase in pay. Very often he does not want to do so, but is compelled by the inflation of the prices of things required for his home. I hope that the time is coming when, whatever Government may be in power, the tax will be done away with altogether.

Mr. Ellis Smith: It is now a revenue tax.

Mr. Davies: That is a much better way of putting it.
Another argument put forward against the proposed Clause was that it would be much too expensive and would cost many millions. Could not the Treasury turn its mind to making a smaller concession? May I cite one way, in particular, which might attract the sympathetic consideration of the Chancellor and his colleagues? I put it forward as an illustration. There is a tax of 60 per cent. upon all musical instruments except the organ. Why the organ has been selected for exemption, I do not know. That is a tax upon culture and art. The amount that the Treasury gets is well under £1 million and the amount which it can retain must be very small indeed.
Schools are in difficulties about getting musical instruments for their classes. Not


only must they pay very high prices for new instruments, but the tax affects the price of second-hand instruments. Protest after protest is being received from the county councils about their difficulties in finding sufficient musical instruments in order to teach the young. The more they have to pay, the more money the Treasury has to find to finance the county councils. What the Treasury puts into one pocket, it ultimately takes out again, because it is necessary to meet the very Purchase Tax which it has collected.
This affects not only the county councils, but also the public schools. Protest after protest has been received from some of our leading public schools. What will be the effect of the tax upon music? The Treasury has already decided to reduce and, in some cases, abolish Entertainments Duty. Why free the listener and continue to tax the person who provides the music and the entertainment?
We have brought the matter to the Chancellor's attention, and I hope that it will have sympathetic consideration. It is an absurd tax which, as I have shown, affects culture and art and the teaching of it to the young.

Mr. Geoffrey Hirst: I hope that the right hon. and learned Member for Montgomery (Mr. C. Davies) will forgive me if I do not follow him in his precise argument. Time is short, bearing in mind the large variety of subjects which can he discussed under these new Clauses, and I want to be specific and to keep to a Committee point.
I think that the public is not misled and we are not misled here this afternoon by these vast sums of money which have been mentioned and which rather beg the question, because the Opposition in this matter have been compelled, as I myself was compelled last year in a not dissimilar way, to keep within the Money Resolution by tabling Clauses which go very much wider than any of us imagine for a moment that the Chancellor could he expected to go. Nevertheless, I join with the right hon. and learned Gentleman the Member for Montgomery in saying that this does not necessarly mean that the Chancellor must be an Iron Chancellor or that, because an empirical Clause is put down, he must refuse to concede any detail in relation to it.
I wish to raise a point in which I have a great constituency interest; it affects Shipley, but it also affects other districts concerned with wool. It is a subject on which I have addressed the House of Commons previously. It is the question of the Purchase Tax on wool, which is the subject of a Motion standing on the Order Paper in my name and the names of 43 other hon. Members from all parties.
[That this House views with increasing concern the unjust discrimination against wool cloth consequent upon the removal of purchase tax on non-wool fabrics, and calls upon Her Majesty's Government to remove the tax on wool cloth and thus redress the existing disparity so that fair competition is maintained.]
I am glad to see the hon. Member for Ashton-under-Lyne (Mr. Rhodes), because he is always ready to support the needs of the textile industry.
This subject dates back in its tiresomeness to 19th April, 1955, when the then Chancellor announced a great concession of a reduction from 50 to 25 per cent. in the Purchase Tax on piece goods and household textiles of a non-wool character. It is important to bear in mind that the D scheme was then in full operation. Very soon afterwards, the Purchase Tax on these non-wool textiles was abolished altogether. In due course, the D scheme was abolished and in its place, in October, 1955, there were introduced the rates of tax to which the right hon. Member for Battersea, North (Mr. Jay) has referred this afternoon—5 per cent. on all clothing but 10 per cent. on wool cloth sold in the piece.
This rate applies only to wool cloth, and it is this discrimination in taxation on wool cloth which has not only hurt the industry, but has undermined its sense of justice in the Administration responsible for maintaining it. That is not a political point. It is a point which all parties in the Committee regret, and I know that I shall receive support from all quarters, not only from my own party, but also from the Labour and Liberal Parties.
This is a great bone of contention. All sorts of excuses have been put up for this discrimination. To begin with, the excuse was that there was no discrimination in it at all. That ran, if I may use the phrase, for no more than six months.

The Deputy-Chairman: I do not want to interrupt the hon. Member, but I must point out that he cannot discuss the question of Purchase Tax on individual items. They can be brought into the discussion only by way of illustration.

Mr. Hirst: This is not an individual item, Sir Gordon. It is a whole trade. Surely I can discuss the effect of the tax on a whole trade.

The Deputy-Chairman: I thought that the hon. Member was dealing with a particular commodity.

4.15 p.m.

Mr. Hirst: It is not a particular commodity, but I must follow your Ruling, Sir Gordon. It is a very wide range of materials.
The class of goods which I have illustrated carries a rate of Purchase Tax which is not applicable to any other class of goods in this category, and I think it can be argued that there should be some explanation given why, over the years, one section of the tax code, of Purchase Tax, has been different in relation to a commodity which is working freely in competition with other commodities taxed at a different rate.
In view of the very poor excuses and answers which we have had on this matter, and the fact that it represents a very small sum of money, I hope that at long last not only this Committee but the trade itself will be given an inspiration to guide it so that it can feel that this continuing injustice, which has never been satisfactorily explained, is to be removed. In the past, every time any excuse has been advanced, it has always been answered by the trade, and this has led to a shift of ground by the Administration to try to find a further justification for the discrimination.

Mr. C. W. Gibson: I should like to support the proposals put forward by my right hon. Friend the Member for Battersea, North (Mr. Jay), not because, like my right hon. Friend the Member for Easington (Mr. Shinwell), I feel any particular sense of good will towards the Government, but because I want to put it to the Government that this tax is oppressive, unfair and unreasonable towards the people it hits hardest.
My right hon. Friend went over the list of articles, and this illustrated that the

tax affects most those people who can least afford to pay it. Anyone who has been round the shops trying to buy household goods knows how difficult is the situation for ordinary working people all over the country when a tax of this kind is retained. In fact, it was reimposed by the Government after it had earlier been removed. It is surely a sound principle of taxation that a tax which is oppressive, unreasonable and unfair towards the people on whom it falls should be removed as soon as possible.
I understand that the Minister said that this concession would cost £150 million. Suppose it does. If, to leave that spending power in the hands of the millions of people, will tend to relieve the pressure for more wages in the next twelve months, it will be well worth while. We are now passing through a period of wage demands and wage increases. They have not reached their end. All trade unionists who use their brains at all are very perturbed about what the position is likely to be in twelve or eighteen months' time when the new Rent Act begins to be fully effective and we have the new increases in prices with which we are threatened for coal, gas, electricity, and other things.
It is inevitable that the organised workers will demand an improvement in their wage scales because they feel, I think quite rightly, that they are entitled to maintain their present standards of living which, according to Government reports on earnings and the standard of living, cannot be said to be too high in these days and which I do not think are at all high.
Even a skilled carpenter in London, where the highest wages in the building industry are paid, still gets less than 10 guineas a week. Unless he does a lot of overtime, or works for a contractor who will faithfully and properly carry out the bonus agreement scheme in the industry—which, I am sorry to say, most of them do not—he never gets more than 10 guineas. At the end of the year, after allowance has been made for lost time for inevitable bad weather, his average earnings are found to have been a great deal less than 10 guineas a week, yet he is one of the highest paid skilled craftsmen in the country.
Many people whose work is not regarded as skilled, such as shop assistants


—although I think that in many ways they are skilled—receive £2 a week less than the skilled carpenter. Even an engineer does not get a guaranteed wage of 10 guineas a week. That kind of person, faced with the prospect in the next twelve months of rising prices and very stiff increases in rent—in some cases already attempts are being made to operate the rent increases—will inevitably demand increases in wages, unless the Government use their powers to hold the cost of living. They can do so if they wish, as that has been done in the past. To reduce or abolish Purchase Tax on household articles which were mentioned at the beginning of this debate would make a considerable contribution towards creating that atmosphere which in the next twelve months may save this country from a great deal of industrial trouble.
I hope that the Economic Secretary will consider that point if he is to say anything more in this debate. It is of first-class importance and is a subject of conversation all over the country by those concerned. If we are to continue Purchase Tax on the wide range of household goods which it at present covers and, in addition, are to have the increases to which I have referred, it is inevitable that there will be demands from trade unions all over the country for increases in wages. Those demands will not be to improve the standard of living, but to maintain it. It would be much better for the wage-earners if the standards of living could be held by holding prices than by allowing the continual spiral of wage and price increases to go on.
I urge the Government very strongly to have second thoughts about this matter, to accept these proposals and make what would be a most striking contribution towards creating the right atmosphere in the economic life of our country.

Mr. Barnett Janner: Has it occurred to the Economic Secretary that we cannot talk about the figures to which he referred in a kind of poetic vacuum? We are asking for something which affects the vast majority of economists in this country—the housewives. Of all the economists the one who has the most practical job is the housewife. She has to consider how to make both ends meet from the sum which

arrives in her hands from her work, or from the work of her husband and herself.
The Economic Secretary has not realised that the Government have placed such an imposition on the householders recently that it will be literally impossible for them, in consequence of the rise of rent, to maintain their standard of living in their homes and, at the same time, to provide themselves with the necessities of life. Among those necessities of life are such domestic utensils as are being discussed. Does the right hon. Gentleman know, or has he inquired, what the average householder today is having to put up with in the way of the threats and demands for higher rents? Does he realise that hundreds of thousands, possibly millions, of notices have gone out already, telling average householders that their statutory tenancies or their contractual tenancies are ending and that in the immediate future, in respect of houses which are not controlled—

The Deputy-Chairman: Order. I am sorry to interrupt the hon. Member, but the new Clause we are discussing is confined to Purchase Tax.

Mr. Janner: With the greatest respect, Sir Gordon, I am dealing with matters which are relevant to the price of particular domestic utensils concerning which the new Clauses have been put upon the Notice Paper. I am trying to impress on the Economic Secretary that he does not realise what the retention of this very high rate of Purchase Tax on these commodities means, particularly in view of the action of his Government, which is being criminal in the kind of increases imposed on the householder already.
If the right hon. Gentleman really understood the situation he would be anxious to temper the wind to the shorn lamb—shorn by the Government. How can he do that? I appeal to him to take this into consideration. How will he allow the housewife to be in a position to meet what he and his Government have imposed by way of additional expenses on her? The best and immediate way of doing that is to allow something by way of a release from expenditure faced in other directions by that person.
If it were a question of a luxury perhaps the right hon. Gentleman would


have a reason for retaining it. He should realise that, although he talks of about £150 million as the sum involved, the money which will have to be found by householders will be very much more. Perhaps I ought not to talk in exaggerated terms—it will be many times more. A duty is placed on the right hon. Gentleman to do all he can to meet the situation.
I suggest that there is nothing unreasonable in this proposed new Clause. On the contrary, it is something which is reasonable, something which ought to be done and something which his Government must do, if they understand the needs of the people, to mitigate the difficulties they have placed on people whose homes are in danger.
If the right hon. Gentleman does not accept this, I say, and I am sure that people throughout the country will say, that he is not only not allowing a reasonable demand made by those interested in these proposals, but is determined that men and women who cannot possibly afford any more shall be prevented from having the normal facilities and standards of life which, hitherto, they have had.
I hope that, in view of the arguments which have been put forward with particular emphasis by my right hon. and hon. Friends, and in a minor way, perhaps, by myself, the right hon. Gentleman will reconsider his decision and come to the conclusion that he must grant the concession for which we ask.

4.30 p.m.

Mr. Victor Collins: When the Economic Secretary made his brief intervention, earlier in the debate, he told us that the cost of reducing Purchase Tax from 5 per cent. or 10 per cent. to 1 per cent. would be £46 million; from 30 per cent. to 15 per cent., £60 million; and from 15 per cent. to 5 per cent., £16 million. He appeared to think that, having said that there was nothing else to say, we should be flattened on this side of the Committee. He seemed to think that if those amounts were not collected in taxation people would have more money to spend and that would exacerbate the inflationary situation.
I should like to ask the Economic Secretary whether he thinks that when Purchase Tax of 1s. in the £, 5 per cent.,

is added, that is all the housewife pays. If he does think that, I assure him that it is very far from the truth. The tax which is collected in that way, particularly in the lower ranges, eventually, for reasons which I will try to explain, becomes very much more. Indeed, possibly treble the amount that is collected is actually paid by the public. I can scarcely imagine a more inflationary situation than that and a less satisfactory tax.
The Economic Secretary must surely realise that in the 5 per cent. and 10 per cent. ranges we are talking about things like boots and shoes, gloves, haberdashery and cushions. There are hundreds of items, every single one of which is in daily use in the home or on the person, and, therefore, this 5 per cent. or 10 per cent. is a sales tax and a deliberate and inflationary impost on essentials. If the Government were sincere in their determination to stabilise living costs and to reverse the ascending spiral, there would be no more practical or effective step that they could take than the removal of this tax.
This week, millions of workers whose wages are subject to the cost-of-living index will receive an automatic increase and one of the factors of that increase depends on the cost of the articles which are the subject of these new Clauses. If, in fact, this tax were not collected and these Clauses were accepted, it is not too much to say that these automatic wage increases would not be taking place. Therefore, when a wage increase of that kind takes place, inevitably, if not immediately, it means an increase in prices, and this goes on and on.
My hon. Friend the Member for Clapham (Mr. Gibson) said that the workers will be pressing for increased wages to protect their living standards. We all know, unfortunately, that they do not succeed in doing so, even when they get increases in monetary wages, and that is a tragic position of which the men are well aware. They are well aware that this position has been foisted on them by the Government but there is nothing else they can do. It is extraordinary that we should be asking for relief in this modest range of goods—the 5 per cent. and 10 per cent. Range—which the Economic Secretary said would cost £46 million, and that we should be refused this, when the Budget has already given


£34 million to Surtax payers. If that is not inflationary, I should like to know what is.
There are, of course, in these ranges a quite bewildering list of exemptions. I have previously drawn attention to the fact that the list is compiled and issued in such a way as to cause the maximum amount of bewilderment. I do not want to go into that again. That is part of the cost which is added by the manufacturer. He has to maintain a staff to run this Purchase Tax business. He has to receive the very courteous officer from Customs and Excise. Sometimes he is there for days on end and a senior member of the firm has to be with him. All these costs are added, in fact, to the cost of the article.
When the retailer receives his goods he gets an invoice for the goods and the tax is charged on the uplifted price of the article, very often a higher price than the manufacturer has himself charged, because always the tax is levied at the highest retail price. Then the retailer, because he is at risk—if he has paid the tax and the taxation policy is then changed and the tax is reduced he loses money—adds on his bit. So it is not merely 5 per cent. or 10 per cent., or whatever it is; it is at least double that which the housewife eventually has to pay.
This 1s. in the £ which the Government are exacting does not even begin to end the matter. It eventually becomes 3s. in the £ on every pair of boots and shoes, aprons, socks or stockings, gloves, scarves and shawls. The same thing applies to the vast range of household articles on which, in 1955, the Government, for the first time, introduced a tax of 30 per cent. and which, in this Finance Bill, on many of the articles is reduced to 15 per cent. When this tax was introduced the Minister of Housing and Local Government, who was then the Financial Secretary to the Treasury, justified it by saying that this was a step to counter inflation. Will anyone suggest that it has been successful?
In the last two years there has been a further considerable widening of the inflationary situation. These particular taxes, the subject of the three new Clauses under discussion, are, in most cases, on articles which were tax-free under the

utility scheme and under the D scheme which followed. So it is a new imposition. We have had the utility scheme and the D scheme applying to articles which were in general and common use and which it was thought to be proper not to subject to tax, This list of articles is, in the main, a newly imposed list of taxes.
Right through the domestic furniture, practically everything we sit on, sit at or lie down on is subject to tax in one form or another. Almost no familiar article in the home escapes this tax. It has caused unemployment and difficulties in the furniture industry, quite apart from the hardship on young people setting up a home. I therefore ask the Economic Secretary to deal with this particular point of the end product of the £46 million, which is the cost, he tells us, of these 5 per cent. or 10 per cent. new Clauses. Will he tell us how much it costs the housewife, where is the real inflation, and take this through the whole range of taxation? I think it is true to say that when we are dealing here with matters affecting industry we seldom fully realise the full extent of the actions we have taken. From the viewpoint of production and living costs, this tax is by every test the worst possible way of raising revenue.
I should like to raise one point of detail with the Economic Secretary concerning the 30 per cent. range. He will recall that at an earlier stage I moved an Amendment in respect of sewing machines, when he replied that the Chancellor had kept sewing machines at 30 per cent. Purchase Tax instead of reducing them to 15 per cent. with the rest of the domestic appliances and apparatus because of the difficulty of distinguishing between hand and treadle-operated sewing machines and those which were electrically driven. The right hon. Gentleman added that it was a very simple matter to put an electrical drive on to a hand-operated sewing machine and, therefore, the tax had to be continued at 30 per cent.
Since 28th May, when I raised the matter, I have been informed by the second largest manufacturers of sewing machines in the country that for the last twelve months they have been making a large hand-operated domestic sewing machine which cannot be converted easily to electrical operation. It could be done only at their factory and at prohibitive cost. If that is the case, I submit that


such machines which are incapable of conversion to electrical drive should properly be included in paragraph (a) of Group 12, namely, appliances and apparatus not designed for operation by electricity or gas. If that is the case, these sewing machines, to which one of the new Clauses relates, certainly should be reduced to 15 per cent. with the other articles.
The Economic Secretary might say that that would require merely an administrative change. If so, I shall be glad to have his confirmation of that or, at least, an assurance that he will look into the matter. The point is one of substance, and if it can be met in this way, as it should be, sewing machines ought not to be continued at this high rate of tax.
We have been talking about inflation and savings. It would be much better to encourage people to buy sewing machines, with which they can make their own clothes and do their own repairs, than spend a lot of money in the shops. This is an article of domestic character and it should be possible to make this concession. I hope that the Economic Secretary will reply both to this aspect and to the other and vital point of the cost of the tax and what it costs the housewife in the form of the purchased article.

Mr. Birch: We have had a wide-ranging debate covering a great variety of topics. I would, first, remind the Committee that the effect of the Budget is to reduce Purchase Tax and not to increase it. From some of the speeches one hears, there seems to be an impression that Purchase Tax has been increased in the Budget.

Mr. Jay: The right hon. Gentleman will not deny that the revenue that the Government will raise this year in Purchase Tax is greater than last year, according to their own Financial Statement.

Mr. Birch: It is £4 million more than last year, but £18 million less than it would have been if the tax had not been reduced. The point is that the rates have been reduced. Owing to the increased prosperity, a great many more things are consumed and, therefore, the revenue increases.
The Committee was pleased to have the right hon. Member for Easington (Mr. Shinwell) participating in an economic

debate. It was a great golden vision that we should get a right hon. Member on the opposite side really interested in economy. At the beginning of the last century, and sometimes in this century, we have had distinguished men really interested in pressing for economy. Everybody is always anxious to press economy in general, but never economy in particular. The only economy that the right hon. Gentleman suggested was economy in arms, which, in some ways, was not his strong point when he was Minister of Defence.
The right hon. Gentleman raised the question of the cost of living and what could be done to reduce it. The only answer I can give which is relevant to the Clause is that the last way to succeed in reducing the cost of living is by increasing inflation; and one of the ways of increasing inflation would be to have a large remission of Purchase Tax.
4.45 p.m.
Then, we had the right hon. and learned Member for Montgomery (Mr. C. Davies), who, like the rest of us, does not particularly like this tax. He said, quite rightly, that if there was unemployment, it would be abolished. I am certain that that would be one of the cures we should apply if there was serious unemployment. But that does not seem to me to be a good reason for abolishing the tax when we have a very high level of employment. It is a shot which we have in the locker in case we are in difficulty.
The right hon. and learned Gentleman made a moving plea for musical instruments, which he has already made to my right hon. Friend the Chancellor, and I will, of course, pass on what he said. It was suggested by the right hon. and learned Gentleman that Purchase Tax might in some cases harm the export trade by restricting the home market. That is, of course, an argument, but it is valid only if the home trade is in serious difficulties. It is true that if the home trade is too easy, the incentive to export is less, whereas if it is not quite as easy to sell everything at home, there is an increased incentive to export. Purchase Tax is, therefore, in that respect, ambivalent—it works both ways.
My hon. Friend the Member for Shipley (Mr. Hirst) spoke about wool, as


he has done on frequent former occasions. I cannot add to the answers that have been given before. The wool trade, however, as my hon. Friend knows, is not in too bad a way at the moment. All I can promise to do is to pass on to my right hon. Friend my hon. Friend's remarks.
The hon. Member for Clapham (Mr. Gibson) said, as other hon. Members have done, that this tax was what economists called regressive—that is to say, it bears most hardly upon the poor. It is true that any indirect tax is to a certain extent regressive. All one can say is that the Purchase Tax now is rather less regressive than it was in 1950.
This year, we are raising 52 per cent. of the total tax at the higher rates of 5O, 60 and 90 per cent., mainly on the more expensive and more luxury type of goods, whereas in 1950 the amount raised at the higher rates—then 66⅔rds and 100 per cent.—was only 42 per cent. That answers some of the points of the hon. Member for Leicester, North-West (Mr. Janner), who got on to other subjects, to pursue which would earn me your stern censorship, Mr. Thomas.

Mr. Jay: The Economic Secretary's figures prove nothing if the Government have raised certain goods from the lower to the higher rates.

Mr. Birch: In this Budget, the Government have reduced them again.

Mr. Janner: I do not know why the right hon. Gentleman is so timid about dealing with the question of the amount already imposed on the housewife and saying why he should not deal with this tax in consequence of the imposition which the Government have placed upon the housewife.

Mr. Birch: If I dealt with the Rent Act, I should be out of order and would incur your censorship, Mr. Thomas. The main argument I have given is that we would not help matters if we were to do what the Opposition wish us to do, because we would increase inflation and that would bring about a further rise in prices.

Mr. Roy Jenkins: Why does it increase inflation more to reduce indirect taxation, like the Purchase Tax, which, although it

might lead to a slight increase in inflationary pressure, also would have an effect on the price level, but does not apparently, in the view of the Government, increase inflation to reduce direct taxation, whether to the payers of Surtax or any other tax which has no compensating effect upon the price level?

Mr. Birch: I said no such thing. In fact, in this Budget, both direct and indirect taxation have been reduced, and to the extent that the Chancellor thought was reasonable and possible. The Clauses ask us to go further and would more than double the amount which my right hon. Friend the Chancellor thought it possible to remit.
The hon. Member for Shoreditch and Finsbury (Mr. Collins) raised two points. First, he asked how much of the 1s. in the £ is really passed on to the housewife, and suggested that it might be as much as 2s. and 3s. in the £. I am advised that the average is much more like 8d. in the £. Of course, there may be cases of people who do stick it on, but that is the advice I get from the Customs and Excise.

Mr. Collins: I understood the Economic Secretary to say the average was 8d. in the £. I presume that he means 1s. 8d. in the £, because the original tax is 1s. in the £. Even so, I can assure him it often comes to very much more.

Mr. Birch: No, I meant 8d. in the £.
The other matter that he mentioned was sewing machines, a subject which, I am glad to see, he has pursued with assiduity. He raised what I thought was an interesting point on that and, if he will allow me to. I should like to look into it and write to him when I have the answer.

Mr. Hector Hughes: I should like to deal with one aspect of the two speeches which the Minister has made. In both of them, he pinned his argument to a generalisation about all these new Clauses. He did not go into the several details put to him by my hon. Friends. The best that he could do was to say, when dealing with sewing machines, that he would like to look into the matter and write to my hon. Friend the Member for Shoreditch and Finsbury (Mr. Collins) after the debate on the Bill is completed.
I submit that that is not a proper way to treat serious arguments, and that he should have dealt with each of the Clauses on its merits. His generalisation was that these Clauses would be too expensive. That may be, but what does "expensive" mean? Does it mean expensive to the health of the people? Expensive to the defence of the realm? Expensive to industry?
Like many generalisations, his is quite unsound. It has been put to him that in certain cases the removal or reduction of Purchase Tax would have a beneficial effect on purchasing power—that it would encourage industry, and have a beneficial effect on exports. What effect would some of the Clauses have on the tools of various trades? These matters seem to be beyond the ken of the Minister, and I suggest that he is not treating the Committee with due respect when he does not give precise, diligent, careful and exhaustive consideration to each of the detailed arguments that have been advanced. The right hon. Gentleman's answer was completely without discrimination. He did not discriminate between one new Clause and another. Why does he not do so? Is it because he is incompetent, or is it because he is negligent?
I should have liked to have said a word about the example of musical instruments

given by the right hon. and learned Gentleman the Member for Montgomery (Mr. C. Davies), but I will forbear because I hope to refer to that in the debate on the next set of Clauses.

I confine myself now to the one point that the Minister, in advancing unsound generalisations, has not treated the Committee with proper respect. Each of the detailed arguments, each of the detailed aspects of industry, employment and the home, put before the Committee by various hon. Members deserves serious and detailed consideration. The Economic Secretary has not given that consideration, and in that I submit that he is lacking in respect to the Committee and in responsibility to the country.

Mr. Jay: As the Economic Secretary has not given detailed answers to the arguments raised, except to say, in one case, that he would think about it and. in others, would not even do that, and as he has not produced any practical proposals for levelling or reducing the cost of living, I hope that my hon. Friends will press this new Clause in the Division Lobby.

Question put, That the Clause be read a Second time:—

The Committee divided: Ayes 224, Noes 257.

Division No. 160.]
AYES
4.54 p.m.


Ainsley, J. W.
Chapman, W. D.
Fraser, Thomas (Hamilton)


Allaun, Frank (Salford, E.)
Chetwynd, G. R.
Gibson, C. W.


Allen, Arthur (Bosworth)
Clunie, J.
Greenwood, Anthony


Allen, Scholefield (Crewe)
Coldrick, W.
Grenfell, Rt. Hon. D. R.


Awbery, S. S.
Collick, P. H. (Birkenhead)
Grey, C. F.


Bacon, Miss Alice
Collins, V. J. (Shoreditch &amp; Finsbury)
Griffiths, Rt. Hon. James (Llanelly)


Balfour, A.
Corbet, Mrs. Freda
Griffiths, William (Exchange)


Bence, C. R. (Dunbartonshire, E.)
Craddock, George (Bradford, S.)
Grimond, J.


Benn, Hn. Wedgwood (Bristol, S.E.)
Cronin, J. D.
Hale, Leslie


Benson, G.
Crossman, R. H. S.
Hall, Rt. Hn. Glenvil (Colne Valley)


Beswick, Frank
Cullen, Mrs. A.
Hamilton, W. W.


Blackburn, F.
Dalton, Rt. Hon. H.
Hannan, W.


Blenkinsop, A.
Davies, Rt. Hn. Clement (Montgomery)
Harrison, J. (Nottingham, N.)


Blyton, W. R.
Davies, Ernest (Enfield, E.)
Hayman, F. H.


Boardman, H.
Davies, Harold (Leek)
Healey, Denis


Bottomley, Rt. Hon. A. G.
Davies, Stephen (Merthyr)
Henderson, Rt. Hn. A. (Rwly Regis)


Bowden, H. W. (Leicester, S.W.)
Deer, G.
Hewitson, Capt. M.


Bowen, E. R. (Cardigan)
de Freitas, Geoffrey
Hobson, C. R. (Keighley)


Bowles, F. G.
Delargy, H. J.
Holman, P.


Boyd, T. C.
Dodds, N. N.
Holmes, Horace


Braddock, Mrs. Elizabeth
Donnelly, D. L.
Holt, A. F.


Brockway, A. F.
Dugdale, Rt. Hn. John (W. Brmwch)
Houghton, Douglas


Broughton, Dr. A. D. D.
Ede, Rt. Hon. J. C.
Hoy, J. H.


Brown, Rt. Hon. George (Belper)
Edelman, M.
Hubbard, T. F.


Brown, Thomas (Ince)
Edwards, Rt. Hon. John (Brighouse)
Hughes, Cledwyn (Anglesey)


Burke, W. A.
Edwards, Rt. Hon. Ness (Caerphilly)
Hughes, Emrys (S. Ayrshire)


Butler, Herbert (Hackney, C.)
Edwards, Robert (Bilston)
Hughes, Hector (Aberdeen, N.)


Callaghan, L. J.
Evans, Albert (Islington, S.W.)
Hunter, A. E.


Carmichael, J.
Fernyhough, E.
Hynd, H. (Accrington)


Castle, Mrs. B. A.
Fienburgh, W.
Hynd, J. B. (Attercliffe)


Champion, A. J.
Forman, J. C.
Isaacs, Rt. Hon. G. A.




Janner, B.
Oliver, G. H.
Strauss, Rt. Hon. George (Vauxhall)


Jay, Rt. Hon. D. P. T.
Oram, A. E.
Stross, Dr. Barnett (Stoke-on-Trent, C.)


Jeger, George (Goole)
Oswald, T.
Summerskill, Rt. Hon. E.


Jenkins, Roy (Stechford)
Owen, W.J.
Swingler, S. T.


Johnson, James (Rugby)
Padley, W. E.
Sylvester, G. O.


Johnston, Douglas (Paisley)
Paget, R. T.
Taylor, Bernard (Mansfield)


Jones, Rt. Hon. A. Creech (Wakefield)
Palmer, A. M. F.
Thomas, Iorweth (Rhondda, W.)


Jones, David (The Hartlepools)
Pannell, Charles (Leeds, W.)
Thomson, George (Dundee, E.)


Jones, Jack (Rotherham)
Parker, J.
Thornton, E.


Jones, J. Idwal (Wrexham)
Parkin, B. T.
Timmons, J.


Kenyon, C.
Pearson, A.
Tomney, F.


Key, Rt. Hon. C. W.
Peart, T. F.
Ungoed-Thomas, Sir Lynn


King, Dr. H. M.
Pentland, N.
Usborne, H. C.


Lawson, G. M.
Popplewell, E.
Viant, S. P.


Ledger, R. J.
Prentice, R. E.
Wade, D. W.


Lee, Frederick (Newton)
Price, J. T. (Westhoughton)
Warbey, W. N.


Lee, Miss Jennie (Cannock)
Probert, A. R.
Watkins, T. E.


Lewis, Arthur
Proctor, W. T.
Weitzman, D.


Lindgren, G. S.
Pryde, D. J.
Wells, Percy (Faversham)


Mabon, Dr. J. Dickson
Randall, H. E.
Wells, William (Walsall, N.)


MacColl, J. E.
Rankin, John
West, D. G.


McGovern, J.
Redhead, E. C.
Wheeldon, W. E.


McInnes, J.
Reeves, J.
White, Mrs. Eirene (E. Flint)


McKay, John (Wallsend)
Reid, William
White, Henry (Derbyshire, N.E.)


MacMillan, M. K. (Western Isles)
Rhodes, H.
Wigg, George


MacPherson, Malcolm (Stirling)
Robens, Rt. Hon. A.
Wilkins, W. A.


Mahon, Simon
Roberts, Goronwy (Caernarvon)
Willey, Frederick


Mallalieu, E. L. (Brigg)
Robinson, Kenneth (St. Pancras, N.)
Williams, David (Neath)


Mallalieu, J. P. W. (Huddersfd, E.)
Ross, William
Williams, Rev. Llywelyn (Ab'tillery)


Mann, Mrs. Jean
Royle, C.
Williams, Ronald (Wigan)


Marquand, Rt. Hon. H. A.
Shinwell, Rt. Hon. E.
Williams, Rt. Hon. T. (Don Valley)


Mason, Roy
Short, E. W.
Williams, W. R. (Openshaw)


Mayhew, C. P.
Silverman, Julius (Aston)
Williams, W. T. (Barons Court)


Mellish, R. J.
Silverman, Sydney (Nelson)
Willis, Eustace (Edinburgh, E.)


Mikardo, Ian
Simmons, C. J. (Brierley Hill)
Wilson, Rt. Hon. Harold (Huyton)


Mitchison, G. R.
Skeffington, A. M.
Winterbottom, Richard


Monslow, W.
Slater, J. (Sedgefield)
Woodburn, Rt. Hon. A.


Moody, A. S.
Smith, Ellis (Stoke, S.)
Woof, R. E.


Morris, Percy (Swansea, W.)
Sorensen, R. W.
Yates, V. (Ladywood)


Morrison, Rt. Hn. Herbert (Lewis'm, S.)
Soskice, Rt. Hon. Sir Frank
Younger, Rt. Hon. K.


Mort, D. L.
Stewart, Michael (Fulham)
Zilliacus, K.


Moss, R.
Stokes, Rt. Hon. R. R. (Ipswich)



Moyle, A.
Stonehouse, John
TELLERS FOR THE AYES:


Mulley, F. W.
Stones, W. (Consett)
Mr. John Taylor and Mr. Rogers


Noel-Baker, Rt. Hon. P. (Derby, S.)
Strachey, R. Hon. J.





NOES


Agnew, Sir Peter
Butcher, Sir Herbert
Fletcher-Cooke, C.


Aitken, W. T.
Butler, Rt. Hn. R.A.(Saffron Walden)
Forrest, G.


Allan, R. A. (Paddington, S.)
Campbell, Sir David
Fort, R.


Alport, C. J. M.
Carr, Robert
Foster, John


Amery, Julian (Preston, N.)
Cary, Sir Robert
Fraser, Hon. Hugh (Stone)


Arbuthnot, John
Channon, Sir Henry
Fraser, Sir Ian (M'cmbe &amp; Lonsdale)


Armstrong, C. W.
Chichester-Clark, R.
Freeth, Denzil


Ashton, H.
Clarke, Brig. Terenoe (Portsmth, W.)
Gammans, Lady


Astor, Hon. J. J.
Cole, Norman
Garner-Evans, E. H.


Atkins, H. E.
Conant, Maj. Sir Roger
George, J. C. (Pollok)


Baldock, Lt.-Cmdr. J. M.
Cooke, Robert
Gibson-Watt, D.


Baldwin, A. E.
Cooper, A. E.
Glover, D.


Balniel, Lord
Cordeaux, Lt.-Col. J. K.
Glyn, Col. R.


Barber, Anthony
Craddock, Beresford (Spelthorne)
Godber, J. B.


Barlow, Sir John
Crosthwaite-Eyre, Col. O. E.
Gomme-Duncan, Col. Sir Alan


Barter, John
Crowder, Petre (Ruislip—Northwood)
Goodhart, Philip


Baxter, Sir Beverley
Cunningham, Knox
Gough, C. F. H.


Beamish, Maj. Tufton
Dance, J. C. G.
Gower, H. R.


Bell, Philip (Bolton, E.)
D'Avigdor-Goldsmid, Sir Henry
Graham, Sir Fergus


Bell, Ronald (Bucks, S.)
Deedes, W. F.
Grant, W. (Woodside)


Biggs-Davison, J. A.
Dodds-Parker, A. D.
Green, A.


Birch, Rt. Hon. Nigel
Donaldson, Cmdr. C. E. McA.
Gresham Cooke, R.


Bishop, F. P.
Doughty, C. J. A.
Grimston, Sir Robert (Westbury)


Bossom, Sir Alfred
Drayson, G. B.
Grosvenor, Lt.-Col. R. G.


Boyd-Carpenter, Rt. Hon. J. A.
du Cann, E. D. L.
Gurden, Harold


Boyle, Sir Edward
Dugdale, Rt. Hn. Sir T. (Richmond)
Hall, John (Wycombe)


Braine, B. R.
Eden, J. B. (Bournemouth, West)
Harris, Frederic (Croydon, N.W.)


Braithwaite, Sir Albert (Harrow, W.)
Elliot, Rt. Hon. W. E. (Kelvingrove)
Harris, Reader (Heston)


Bromley-Davenport, Lt.-Col. W. H.
Elliott, R. W.(N'castle upon Tyne, N.)
Harrison, A. B. C. (Maldon)


Brooke, Rt. Hon. Henry
Emmet, Hon. Mrs. Evelyn
Harvey, Sir Arthur (Macclesfield)


Brooman-White, R. C.
Errington, Sir Eric
Harvey, Ian (Harrow, E.)


Browne, J. Nixon (Craigton)
Erroll, F. J.
Harvey, John (Walthamstow, E.)


Bryan, P.
Farey-Jones, F. W.
Heald, Rt. Hon. Sir Lionel


Bullus, Wing Commander E. E.
Fell, A.
Heath, Rt. Hon. E. R. G.


Burden, F. F. A.
Fisher, Nigel
Henderson, John (Cathcart)







Henderson-Stewart, Sir James
Mackeson, Brig. Sir Harry
Ridsdale, J. E.


Hesketh, R. F.
McKibbin, A. J.
Robertson, Sir David


Hicks-Beach, Maj. W. W.
Mackie, J. H. (Galloway)
Robinson, Sir Roland (Blackpool, Sir


Hill, Rt. Hon. Charles (Luton)
McLauglin, Mrs. P.
Robson Brown, Sir William


Hill, Mrs. E. (Wythenshawe)
Maclean, Sir Fitzroy (Lancaster)
Rodgers, John (Sevenoaks)


Hirst, Geoffrey
MacLeod, John (Ross &amp; Cromarty)
Roper, Sir Harold


Holland-Martin, C. J.
Macmillan, Maurice (Halifax)
Ropner, Col. Sir Leonard


Hope, Lord John
Macpherson, Niall (Dumfries)
Russell, R. S.


Hornby, R. P.
Maddan, Martin
Schofield, Lt. Col. W.


Hornsby-Smith, Miss M. P,
Maitland, Cdr. J. F. W. (Horncastle)
Scott-Miller, Cmdr. R.


Horobin, Sir Ian
Manningham-Buller, Rt. Hn. Sir R.
Sharples, R. C.


Horsbrugh, Rt. Hon. Dame Florence
Markham, Major Sir Frank
Shepherd, William


Howard, Hon. Greville (St. Ives)
Marlowe, A. A. H.
Simon, J. E. S. (Middlesbrough, W.)


Howard, John (Test)
Marples, Rt. Hon. A. E.
Smithers, Peter (Winchester)


Hudson, W. R. A. (Hull, N.)
Marshall, Douglas
Soames, Christopher


Hughes Hallett, Vice-Admiral J.
Mathew, R.
Spearman, Sir Alexander


Hutchison, Sir Ian Clark (E'b'gh, W.)
Mawby, R. L.
Speir, R. M.


Hutchison, Sir James (Scotstoun)
Maydon, Lt.-Comdr, S. L. C.
Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)


Hutchison, Michael Clark (E'b'gh, S.)
Milligan, Rt. Hon. W. R.
Stanley, Capt. Hon. Richard


Hylton-Foster, Rt. Hon. Sir Harry
Molson, Rt. Hon. Hugh
Stevens, Geoffrey


Iremonger, T. L.
Morrison, John (Salisbury)
Steward, Harold (Stockport, S.)


Irvine, Bryant Godman (Rye)
Mott-Radclyffe, Sir Charles
Steward, Sir William (Woolwich, W.)


Jenkins, Robert (Dulwich)
Nabarro, G. D. N.
Storey, S.


Jennings, Sir Roland (Hallam)
Neave, Airey
Stuart, Rt. Hon. James (Moray)


Johnson, Dr. Donald (Carlisle)
Nicholls, Harmar
Studholme, Sir Henry


Johnson, Eric (Blackley)
Nicholson, Godfrey (Farnham)
Taylor, Sir Charles (Eastbourne)


Jones, Rt. Hon. Aubrey (Hall Green)
Noble, Comdr. Rt. Hon. Allan
Teeling, W.


Joseph, Sir Keith
Nugent, G. R. H.
Temple, John M.


Kaberry, D.
Oakshott, H. D.
Thomas, Leslie (Canterbury)


Kerby, Capt. H. B.
O'Neill, Hn. Phelim (Co. Antrim, N.)
Thompson, Kenneth (Walton)


Kerr, Sir Hamilton
Orr, Capt. L. P. S.
Thompson, Lt.-Cdr. R.(Croydon, S.)


Kershaw, J. A.
Orr-Ewing, Sir Ian (Weston-S-Mare)
Thornton-Kemsley, C. N.


Kimball, M.
Page, R. G.
Tilney, John (Wavertree)


Kirk, P. M.
Pannell, N. A. (Kirkdale)
Vaughan-Morgan, J. K.


Lagden, G. W.
Partridge, E.
Vickers, Miss Joan


Lambton, Viscount
Peyton, J. W. W.
Wakefield, Edward (Derbyshire, W.)


Lancaster, Col. C. G.
Pickthorn, K. W. M.
Wakefield, Sir Wavell (St. M'lebone)


Langford-Holt, J. A.
Pike, Miss Mervyn
Walker-Smith, Rt. Hon. Derek


Leavey, J. A.
Pilkington, Capt. R. A.
Wall, Major Patrick


Leburn, W. G.
Pitman, I. J.
Ward, Rt. Hon. G. R. (Worcester)


Legh, Hon. Peter (Petersfield)
Pitt, Miss E. M.
Ward, Dame Irene (Tynemouth)


Lindsay, Hon. James (Devon, N.)
Powell, J. Enoch
Waterhouse, Capt. Rt. Hon. C.


Lindsay, Martin (Solihull)
Price, David (Eastleigh)
Watkinson, Rt. Hon. Harold


Linstead, Sir H. N.
Price, Henry (Lewisham, W.)
Webbe, Sir H.


Lloyd, Maj. Sir Guy (Renfrew, E.)
Profumo, J. D.
Whitelaw, W. S. I.


Longden, Gilbert
Raikes, Sir Victor
Williams, Paul (Sunderland, S.)


Lucas, Sir Jocelyn (Portsmouth, S.)
Rawlinson, Peter
Williams, R. Dudley (Exeter)


Lucas, P. B. (Brentford &amp; Chiswick)
Redmayne, M.
Woollam, John Victor


Lucas-Tooth, Sir Hugh
Rees-Davies, W. R.
Yates, William (The Wrekin)


McAdden, S. J.
Remnant, Hon. P.
TELLERS FOR THE NOES:


Macdonald, Sir Peter
Renton, D. L. M.
Mr. Wills and Mr. Hughes-Young.

New Clause.—(REDUCTION OF PURCHASE TAX FROM FIFTY PER CENT. TO THIRTY PER CENT.)

(1) The enactments relating to purchase tax shall have effect as if in Part I of the Eighth Schedule to the Finance Act, 1948 (as amended by Treasury orders under section twenty-one of that Act and in particular by the Purchase Tax (Consolidation) Order, 1956), a rate of tax of thirty per cent. were substituted for any rate of fifty per cent.

(2) This section shall have effect as from the sixth day of August, nineteen hundred and fifty-seven.—[Mr. Glenvil Hall.]

Brought up, and read the First time.

Mr. Glenvil Hall: I beg to move, That the Clause be read a Second time.

The Temporary Chairman (Mr. George Thomas): I believe that it would be for the convenience of the Committee to discuss with this new Clause the following

one in the name of the hon. Lady the Member for Flint, East (Mrs. White), "Reduction of purchase tax from sixty per cent. to fifty per cent.", and that in the name of the hon. Member for Shore-ditch and Finsbury (Mr. Collins), "Reduction of purchase tax from ninety per cent. to seventy-five per cent."

Mr. Glenvil Hall: So far as we on this side of the Committee are concerned, the suggestion you make, Mr. Thomas is one with which we agree.
When the right hon. and learned Member for Montgomery (Mr. C. Davies) spoke on the Clause with which we have just dealt, he reminded us of the fact that the Purchase Tax was introduced in 1940 by the then Chancellor of the Exchequer, the late Sir Kingsley Wood, and that it was a war-time measure. I suppose that the number of hon. Members who heard


the tax introduced by Sir Kingsley Wood must now be a dwindling number in this House. I was there, and like almost everybody else who heard that speech, I certainly never dreamed for a moment that, twelve years after the war had ended, the Purchase Tax would not only still be levied, but levied more generally and at a much higher rate than it then was.
In introducing it, Sir Kingsley Wood did so on the grounds that it was
the urgent and imperative need both to limit civilian consumption and also to obtain a new source of revenue.
These objectives do not altogether marry. The more we limit consumption, the less, of course, we raise in revenue, and I think there is no doubt that when Sir Kingsley Wood introduced this tax, seventeen years ago, he had particularly in mind the hope that it would limit consumption. The raising of revenue was secondary to that purpose.
This object, and a very necessary one in wartime, was borne out by what he went on to say. He continued:
…there will be a high rate of tax on the purchase of goods which are either luxuries or goods which in the hard circumstances of war we can either do without or of which we can at least postpone the replacement."—[OFFICIAL REPORT, 23rd July, 1940; Vol. 363, c. 650–2.]
It is interesting to note, in the light of some of the rates which are applied today, that he went on to say that the high rate he had in mind—and I emphasise the word "high"—on luxuries and things unessential in the midst of an all-out war, would be 33⅓ per cent. of the wholesale value. The series of new Clauses with which the Committee is about to deal concentrates on these higher rates, some of them well above the 33⅓ per cent. mentioned by Sir Kingsley Wood. We want, if we can, to extract from the Economic Secretary to the Treasury a statement as to whether, in the light of what has been said already on an earlier Clause, the Government will persist in imposing these very high and, in some cases, ruthless scales.
I believe that my hon. Friend the Member for Birmingham, Ladywood (Mr. V. Yates), in which city jewellery is a staple industry, will, if he is fortunate enough to catch your eye, Mr. Thomas, have something to say

later. As we know, the rate of Purchase Tax thereon is 100 per cent., and that is as high as Purchase Tax goes.

Mr. Victor Yates: It is 90 per cent.

Mr. Glenvil Hall: I stand corrected; it is only 90 per cent. but I believe that at one time it was 100 per cent.
This tax, as most of us agree, is a bad tax, because it offends against at least one of the canons of taxation. The amount taken from the taxpayer and received by the Exchequer should normally and as nearly as possible be the same, but, as my hon. Friend the Member for Shoreditch and Finsbury (Mr. Collins) pointed out, the actual amount taken by way of tax is nothing like as much, and, in some cases, well below, that which the consumer actually pays. The reason for that, of course, is that the tax is levied at the wholesale stage, and from then onwards everybody dealing with the goods on which it is imposed seeks, not unnaturally, to get some recoupment of the extra outlay to which he or she has been subjected.
It may well be that some kind of tax of this sort is essential. In my lifetime public opinion has greatly changed on the question of indirect taxation. There was a time when the Liberal Party—now a dwindling party in the House of Commons—was wedded to a policy of direct taxation and anything in the shape of indirect taxes, particularly on food, met with its disapproval. Taxation is now so high that I assume that there is no party in the country that would not agree that some indirect tax on certain commodities or luxuries is necessary.
We on this side of the Committee take the view that Purchase Tax as it stands is not a good tax, and I should like the Economic Secretary, when he replies, to tell the Committee just how long Purchase Tax in its present form is to continue. It is exacted at the wrong time, the scales are full of anomalies and injustices, they are unfair, to traders who never know where they are. We had a good example of this in the autumn of 1955, when traders and others who had got out their Christmas catalogues suddenly found themselves faced with increases in Purchase Tax. Whenever there is a change in the tax, particularly a change downwards, many traders lose money. That


is grossly unfair, and it is time that something was done about it.
One of our reasons for initiating this debate is to draw from the Government, if we can—I know that it is a very difficult thing to do—a statement as to what their future Purchase Tax policy is to be. Ever since the war ended, that is, for the past twelve years, we have had long debates on Purchase Tax on every Finance Bill. We have gone hour after hour, and sometimes all through the night, discussing the incidence of this tax on commodities or classes of goods.
At one time, we yearly had a sort of Dutch auction, when Members put down Amendments for the reduction or the abolition of the tax on this or that class of goods. The Chancellor of the day had to weigh up which he would grant and which he would refuse. It is only this year, owing to the wording of the Money Resolution by the Government which—I hesitate to say this—might be considered by some to be a little sharp in the way of Parliamentary practice, that we are unable to put down, as many of us on both sides of the Committee would desire, Amendments to reduce Purchase Tax on many items.

5.15 p.m.

Mr. Birch: This has happened for the last four years. It is not an innovation this year.

Mr. Glenvil Hall: Though I accept, of course, that that is so, it does not alter the fact that the Government have done it this year. Now would have been the time to have had a wider latitude, after three or four years, of the kind we used to have in the years immediately following the war. This present procedure cramps and hampers hon. Members who desire to ventilate grievances concerning Purchase Tax. All parties feel that hon. Members should be given the opportunity, at least once a year if not more often, to discuss in detail the various scales of Purchase Tax and their incidence on certain classes of goods.
May I mention, purely as an example, the kind of thing which we should like discussed and on which we should like to move Amendments if that were within the rules of order? I refer particularly to musical instruments which, at present, bear a tax of 60 per cent. The right hon. and learned Member for Montgomery

mentioned this matter as an example of the kind of thing about which many of us are worried. I know that my hon. Friend the Member for Maryhill (Mr. Hannan), if he is fortunate enough to catch your eye, Mr. Thomas, would also like to deal with the matter. My hon. Friend has spent a good deal of time, these last few years, trying to awaken public opinion to the iniquity of Purchase Tax on musical instruments. It certainly defeats the objects laid down by the Chancellor of the Exchequer in 1940 as his reasons for imposing the tax.
Musical instruments are not luxuries and things which, at any rate in peacetime, we do not want people to buy or to refrain from using. The tax on musical instruments is, as I think the right hon. and learned Member for Montgomery said, a tax on the tools of trade. I think he ventured to say that musical instruments were the only tools of trade which were still subject to Purchase Tax. I should like the Economic Secretary to say whether that is so. I am inclined to think that that is not entirely true, but, even if it is only partially or even largely true, it is something, I think, of which the Government should take note in considering this Tax.
In 1940, the beginning of the worst period of the war, the then Chancellor of the Exchequer imposed Purchase Tax on musical instruments at the rate of 33⅓ per cent. Since then the rate has been altered eight times. At one time it went up to 100 per cent., and it redounds to the credit of the Labour Government that, in 1946, they reduced the rate to 33⅓ per cent. At a later date it went up again, and now, as the Committee knows, musical instruments pay Purchase Tax at the rate of 60 per cent. This bears very hardly on many well-deserving people who are musically inclined. Many who would like to purchase an instrument of their own are prevented from doing so because they cannot afford to pay the tax.
The tax on an accordion ranges from about £7 to £105 12s. 0d. On a cornet, from £5 to £13 5s. 0d. For a trombone the amounts vary from £5 to £51 11s. 0d. These are very startling figures. The figures for violins are from £1 10s. 0d. for a cheap one to about £12 6s. 0d. for a better class type of instrument. The tax on a saxophone varies from £16 to £43 8s. 0d. and on the bagpipes—some


English hon. Members may think this a good reason for keeping on the tax—it runs from £7 11s. 0d. to £35 4s. 0d. I am sorry that I have no figures for the trumpet—

Mr. Alan McKibbin: Has the right hon. Member figures for the flute, which is such an important instrument in Northern Ireland?

Mr. Glenvil Hall: I will mention the flute in a moment.
I have no figures for the trumpet, an instrument someone said Members of Parliament should be keen on possessing so that they may blow it on their own account. But, joking apart, these figures are startling and I call the attention of the right hon. Gentleman to them in the hope that before we part with this Bill he may be able to give an indication that the Government have taken note of them. I hope that he will also remember that here we are dealing with the tools of trade of many professional people.
I have received representations as, no doubt, have other hon. Members, from local bands in my constituency. These bands fulfil a useful function. They appear on all sorts of festive occasions. Three times within the last two or three months I have been approached by bandleaders and bandsmen and asked whether something can be done about taking off the tax on the instruments which they require. Today, as we all know, musicians are struggling against the competition of canned recorded music and it is an additional hardship that they should have to pay Purchase Tax on their instruments of amounts which I have mentioned.
This is too a tax on education. There has been an enormous development of musical appreciation in the United Kingdom during the last quarter of a century. Music is greatly encouraged in schools and the Government pay money to the Arts Council to enable that body to assist those who are anxious to learn music. Not long ago I attended a meeting where someone speaking for the London County Council gave figures of the expenditure of that authority on musical instruments, a great proportion of which is reflected in Purchase Tax.
The hon. Member for Belfast, East (Mr. McKibbin) mentioned the flute. I

know of a small boy who is learning the flute but whose widowed mother is quite unable to afford to buy him one. He has the loan of one while he is at school, but when he leaves he will have to go without, unless he has saved up sufficient money to buy one. I am sure that the possession of a flute would give him much pleasure.

The Temporary Chairman: The right hon. Gentleman mentioned earlier that he was referring to musical instruments by way of illustration. I think that he is now dealing with the provisions contained in a Clause which appears in the Notice Order in his name, but which I do not propose to call.

Mr. Glenvil Hall: It is, of course, pure coincidence that I happen to be giving musical instruments as an illustration of the kind of tax which should be reduced. It comes within the ambit of the second of the three Clauses which we are now discussing together. I am sure, Mr. Thomas, that you will be aware that we are asking the Government to reduce Purchase Tax on items where at present, it runs to 60 per cent.

The Temporary Chairman: The right hon. Gentleman is quite right, but he will not he in order if he pursues his argument about musical instruments.

Mr. Glenvil Hall: Of course, Mr. Thomas, I must bow to your Ruling. But perhaps you would be good enough to permit me to say that before you occupied the Chair your predecessor allowed quite a lot to be said on this point and, so far, I do not think that I have gone beyond what has been said on the subject. Perhaps you would permit me—I will go no further than this—to say that to buy a flute now costs about £47, of which £14 is tax, and that I consider that a great imposition.
I remember that when Purchase Tax was introduced, in 1940, I was one of a small deputation which waited on the then Chancellor of the Exchequer and invited him not to include hooks among those items on which it was intended to impose Purchase Tax. The then Chancellor had that in mind and I am glad to think that the Publishers' Association and hon. Members were able to persuade him that to tax books was to tax culture.
To tax musical instruments is also wrong and another way of taxing culture.
The Economic Secretary indicated earlier that to accept these Clauses, or even some of them, would cost many millions of pounds. I think he mentioned the figure of £150 million. That is a lot of money, but, as has been pointed out, the concessions already given regarding Income Tax relief in a full year would amount to £102 million, which is two-thirds of what he says the Government cannot now afford. If, quite properly, the Chancellor has in a full year given relief amounting to £20 million for child allowances and allowances for the aged, and that is not considered inflationary, I cannot see why relief on many articles which are now so heavily taxed would be.
Even if the right hon. Gentleman cannot afford, as, I gather, he is adamant in declaring, the general reductions which we ask for because they would be too expensive to the Treasury, that cannot apply, for example, to musical instruments. The total income accruing from Purchase Tax on musical instruments must be below £500,000. It is difficult to get the exact figure but I understand that 40 dealers were invited to send particulars of what they paid, to an eminent firm of accountants in the City, and that is I gather approximately what the total came to.
The right hon. Gentleman will probably say that professional people can get a rebate from Income Tax on any instrument they buy. I should like to know whether that covers the first instrument, or whether one gets the rebate only when the first instrument is replaced, as is the case with law books and robes and other such equipment. I ask the right hon. Gentleman to treat these Clauses seriously. I should like him to say that at least he can make some concession as a result of the long discussions which have been held, and that a case has been made out. It would be an act of statesmanship to accede to the requests which have been made.
5.30 p.m.
Before I sit down, I should like to remind hon. Members opposite that last night, when we were dealing with a Clause relating to the Profits Tax paid by building societies, the whole Committee joined together and insisted on the

Government taking notice of what had been said. I should like to feel that this evening, in like manner, all of us could unite, regardless of party, in the cause of those who are keen on making this nation a music loving people. One way of doing that is to reduce the price of musical instruments.
I hope that the Economic Secretary will not do what he did earlier and what the Financial Secretary has done almost without exception since we began these debates—make an off-hand reply lasting three or four minutes. I find it difficult to charge my memory with the order of debates when the Labour Government were in office, but I think that I shall be well within the recollection of those hon. Members who were present at that time when I say that the Labour Government spokesmen treated Amendments and proposed new Clauses moved from this side of the Committee much more seriously than Ministers opposite have done on this occasion.
We are not here for fun. The Amendments that we move mean a great deal to thousands of people, and we think it only right and proper that the Government should treat them seriously. I hope that on this occasion, at any rate, they will do so.

Mr. McKibbin: have listened with great interest to what the right hon. Member for Colne Valley (Mr. Glenvil Hall) has said about musical instruments. I shall not take as long as he has done to say what I wish to say, because I said almost everything that I can say in the Second Reading debate in an attempt to get Purchase Tax removed from musical instruments for amateur bands in Northern Ireland.
Since then, I have had a request from a well-known firm manufacturing band and orchestral instruments to raise the question of Purchase Tax on those instruments which are used for the education of children. This firm has often sought ways and means to assist schools which have expressed the desire to start a band and has considered the loan of a complete set of instruments for a month or two, or as long as may be necessary, to prove to parents and school authorities that children, if properly taught, can make music very easily. This service


will also include suitable teachers for as long as might be necessary.
Surely, this very worthy effort on behalf of culture and discipline for children deserves every encouragement, but it has been rendered impossible because the firm has discovered that, assuming the value of the equipment to be in the region of £1,000, the Purchase Tax would be rated at approximately £500 and would have to be paid to the Treasury by the firm before it was permitted to proceed with the experiment, thus denying the unfortunate children, for the moment at any rate, the chance of receiving a musical education.
I have no more to say because the unfairness of the situation speaks for itself, but I should like to ask my right hon. Friend, if he cannot see his way to reduce or abolish the tax on musical instruments at the moment, to consider making the tax entirely refundable to a firm supplying free for a period of less than a year, musical instruments to schools or youth organisations, such as the three Service units, the Army Cadet Force, the Sea Cadets and the Air Training Corps. I do not think this concession would cost the Government very much.

Mr. Scholefield Allen: I hope the hon. Member for Belfast, East (Mr. McKibben) will have the courage of his convictions to take himself and his hon. Friends into the Lobby if there is a Division, and I trust that the eloquent plea that he has made on behalf of musical instruments will be effective.
I am making a claim on behalf of what, in my view, and no doubt in the view of most people, is Britain's finest product. I refer to the Rolls-Royce motor car and the Bentley motor car which are manufactured in Crewe, a constituency which I am very proud to represent. Those motor cars depend—I am told they depend absolutely—upon a strong and continuing market in this country in order to survive. On the smaller car, Purchase Tax is paid in hundreds of pounds, but on the Rolls-Royce and Bentley it is paid in thousands. A tax of that magnitude is a strong deterrent, particularly on the home market.
I am happy to be able to tell the Committee that Messrs. Rolls-Royce are exporting more motor cars to the United States of America than they have ever

done in their history, but they cannot survive on the export market alone; they are dependent upon some help from the Government in order to carry out work at Crewe.
The recent wage award to engineers, so I am informed, can only be absorbed by an increased output, and this means an increased home market. Merely to stay at the present level will not do, let alone to suffer a reduction in output if the tax continues. The market for Rolls-Royce products is inevitably small, and unless they can get some help it will have a very damaging effect upon what I believe to be our finest product.
The management says that motor cars of this type will not stand a 60 per cent. Purchase Tax, and that the trouble with the present Government—although this is a criticism not only of this Government but, perhaps, of any Government—is that no action is ever taken until an industry is actually in difficulties. I appeal to the Economic Secretary to do something on behalf of the motor car on which Purchase Tax is paid at the rate of 60 per cent.
It is no use closing the door when the horse has escaped, and if this very fine product is to continue, some help must come, if not today, in the very near future. The motor car industry, and particularly Rolls-Royce at Crewe, depends absolutely upon an early reduction in Purchase Tax. I am happy to say that at present, at Rolls-Royce, the industry is working overtime, but only a few months ago in the winter, partly as a result of the Suez crisis, Rolls-Royce was working a four-day week.
The firm has taken steps to diversify its products, but it is entirely dependent upon the vagaries of the motor trade, and I appeal, therefore, to the Economic Secretary to reconsider the incidence of tax upon a very valuable product amounting, as it does, to thousands of pounds. I hope he will pay some attention to this plea which is made on behalf of those who make this very fine motor car.

Mr. Philip Bell: I only wish to observe that it may at least be said in reply to what the hon. and learned Member for Crewe (Mr. Scholefield Allen) says—though it would be an answer I should not care to make—that this sometimes so-called wicked rich man's Government has, of course, done something to


help Rolls-Royce by reducing the Surtax. Therefore, there will be many more possible Rolls-Royce purchasers. That is one way of looking at it.

Mr. Charles Royle: I am not nearly so ambitious as my hon. and learned Friend the Member for Crewe (Mr. Scholefield Allen), and I do not want to deal with anything so expensive. Nor do I intend to follow my right hon. Friend the Member for Colne Valley (Mr. Genvil Hall) in the argument about musical instruments. While supporting to the full the new Clauses we are discussing, particularly that to reduce the 60 per cent. rate of tax, there are two items, or, rather, an item and a class of items, in the consideration of which I would ask the Committee to occupy a few moments. They are both important.
The first is domestic refrigerators. I do not think very much has been said about them in this Committee when we have discussed previous Finance Bills. In the past, domestic refrigerators were regarded as luxuries, but I submit to the Committee, and in particular to the Economic Secretary, that they are no longer luxuries but have become necessities in the lives of our people. My hon. Friend the Member for Shoreditch and Finsbury (Mr. Collins) tells me, for instance, that in every one of 3,000 flats built since the war by his municipal borough a domestic refrigerator has been installed. That is a fine example of municipal enterprise, and it also shows that refrigerators are among the things housewives need.
I submit that no longer is the domestic refrigerator a luxury, and that it has now become a necessity, and I could not do so at a more appropriate time than now, with the weather we are enjoying, which proves that domestic refrigerators are real necessities. A housewife when doing her shopping can purchase a greater amount of food on one shopping expedition if she has at home a refrigerator in which the food will keep, and surely the Government should help her by accepting the new Clause in these days when the Ministry of Agriculture, Fisheries and Food and the Ministry of Health are taking so deep an interest in food hygiene.
Our overseas trade has been mentioned in the debate. Up to the end of 1955 the United Kingdom was second only to the United States of America as an

exporter of domestic refrigerators. Since 1948 the United Kingdom's industry has exported 1 million domestic refrigerators. That trade has brought in foreign exchange amounting to £67 million, and represents 60 per cent. of the industry's output. In 1955, the industry exported from this country £5½ million worth of refrigerators. In 1956, unfortunately, there was a decrease of 5·. per cent. I feel sure that this tax is an attack on the industry, and I am sure that if the domestic output were increased that would tend very largely to increase the exports of these important commodities.
I do not want to take any more of the time of the Committee upon this matter, because I know many other hon. Members want to speak and the time factor is important today. Therefore, without pursuing the argument in favour of the domestic refrigerator, I simply appeal to the Economic Secretary and, through him, also to the Chancellor to accept these new Clauses, or, if they are not prepared to do anything about them at the moment, favourably to consider this policy for next year. I hope I have said enough to draw their attention to a great need.
5.45 p.m.
The other item or class of items I want briefly to mention is in Group 23. I had the temerity to put down an Amendment, which. Sir Norman, you were not kind enough to call, to reduce from 60 per cent. to 30 per cent. the tax on trunks and other leather receptacles. I have always been interested in leather goods. I think the British nation likes them, and it has always been proud of British leather goods, and I am one of those who can rarely pass a leather goods shop without going into it to see the goods, especially if I think there may be some new design or development.
There are in this country 27,000 people engaged in the production of leather goods, apart from those employed in the tanning and other basic leather trade industries. What I said about the export trade in refrigerators undoubtedly applies to the export trade in leather goods.
This tax was imposed on trunks and other leather receptacles during the war when leather was a very important commodity indeed. The tax was put upon these receptacles to check the purchase of them so that our leather might be


used for important war-time purposes. That need has now gone, and this tax has now become purely and simply a revenue raiser, to the detriment of the people who produce these goods.
Many anomalies arise from the incidence of this tax on these goods, and I would point out some of them. If the firm's turnover is less than £500 per annum there is exemption from Purchase Tax on the goods. The result of that is that the members of a family set up business each one separately, so that while in toto they are doing an enormous trade, each member of the family has a trade worth £500 or less and so has the exemption from tax. I do not think this is quite fair. I think the people who are producing more than £500 worth per annum ought to have the same opportunities.

Mr. Birch: If the hon. Gentleman has some examples of that avoidance, I should be grateful if he would let us al the Treasury know privately. We may have to pursue them.

Mr. Royle: I can assure the right hon. Gentleman that I am in a position to let him have them.

Mr. Birch: Will the hon. Gentleman let me have them?

Mr. Boyle: I certainly will—

Mr. Birch: I thank the hon. Gentleman very much.

Mr. Royle: —but not now in the debate. I am sure the right hon. Gentleman will understand.
A document case without a zip fastener has no tax. If it has a zip fastener there is tax at the 60 per cent. rate. A folio brief case with a zip fastener is free of Purchase tax but a music case, which looks exactly the same, except that it is fastened with a metal rod, bears 60 per cent. Purchase Tax. Dog leads have no Purchase Tax, but children's safety reins attract 30 per cent. tax. A single photograph frame is taxed at 30 per cent., a double photograph frame at 60 per cent. I suppose that works out aright, though I do not know. A wide open shopping basket, from which any pickpocket can pick things out, is free of tax, but a sensible kind of shopping bag, which closes and is fastened at the top, bears tax at

60 per cent. Golf clubs bear no tax, but a golf bag which contains golf clubs, if it is made of leather, bears 60 per cent. tax.
These are ridiculous anomalies, and the Government really ought seriously to consider them with a view to reducing the tax, and I hope that they will also favourably consider all these new Clauses.

Mr. V. Yates: I should like to support my hon. Friends who have spoken on the new Clauses calling for a reduction in Purchase Tax on various articles, but I want to refer particularly to jewellery. My hon. and learned Friend the Member for Crewe (Mr. Scholefield Allen) spoke about increased exports of Rolls-Royce motor cars. I have to report with much regret that in many cases the jewellery industry is experiencing a considerable reduction in the export trade, which must have a serious effect upon the industry.
I have warned the Chancellor on previous occasions about the effects of high Purchase Tax on jewellery, some of which carries 60 per cent. tax and some 90 per cent. I mentioned this fact recently, but the Chancellor did not say anything about it. Therefore, I propose to submit more details in the hope that the Economic Secretary will closely examine what I believe to be the very serious effect of Purchase Tax, and especially of the higher rate, on the jewellery trade.
I cannot do better than quote a letter which was sent to me by the British Jewellers' Association, which I am sure is a very responsible body. I am assured that many firms in Birmingham have experienced a considerable reduction in their export trade. They deal with jewellery carrying 60 per cent. Purchase Tax. If I asked for export figures I am quite sure that the Government would not be able to calculate correctly the reduction in the amount exported by registered post, but I am assured by those who manage the industry that Purchase Tax has had most adverse effects upon it.
The Association, in its letter to me, asked:
…would it not be possible to effect a reduction of tax for real jewellery, to give a much needed stimulus to the craftsman? The nature of his work and the materials in which he works price his product fairly high from the point of view of manufacturing costs, and consequently a 60 per cent, tax on top of this makes it much more difficult to sell than the lower priced imitation jewellery, even bearing that rate of tax.


There is in this industry a craft of stone seal engraving. Only two people in the country row practise it, one in Birmingham and one in London. Jewellers in Birmingham are obliged to send a considerable amount of jewellery to Germany to be engraved and then returned to this country. The Government recognised that there was a case to be made for the craftsman in silverware. I submit that equally there is a case to be made for the craftsman in real jewels, which we want to export to America and elsewhere.
In the course of my personal investigation I was informed by one firm in Birmingham that its export trade has been reduced from 60 per cent. to 40 per cent. of its output. When the Economic Secretary speaks about the cost of reducing Purchase Tax, he must also calculate what is being lost in export trade. I am told by a director of one of these firms that its financial position has been so impaired that it cannot afford to finance export tours to the United States and the West Indies where it could sell its products.
I cannot understand why the Treasury does not appreciate the importance of dealing with anomalies and with other points which I am about to mention. In fine jewellery, diamonds are tax-free. Anyone can purchase or import them. It is only when the diamond is mounted that it becomes taxable. Therefore, the diamond is much more valuable than the precious metal. When it is mounted, the full tax of 60 per cent. is payable on the diamond as well as on the metal. If fashion should change and someone wanted to convert a diamond brooch into diamond earrings, no jeweller could carry out such a request without again charging Purchase Tax on the diamonds. How is the industry to carry on successfully with this kind of restriction placed upon it?
The letter from the Association refers also to the compact trade which carries a 90 per cent. Purchase Tax. Referring to the manufacturer of compacts, flapjacks, vanity cases, lipstick holders, powder bowls and boxes—in general, containers for cosmetics—the Secretary of the Association says:
The trade has repeatedly made representations for a reduction of the tax on these articles, but it is understood that the Treasury have been unwilling to do so because of the association of these articles with the cosmetics

themselves. It is suggested that there is no valid reason why cosmetic containers—such as those mentioned above—should not be taxable when supplied empty in the same way as snuff boxes, cachoo boxes, pill boxes and other receptacles of a personal nature…
A snuff box carries 60 per cent. tax but a powder box carries 90 per cent.
The letter adds:
This particular branch of the trade is being extremely hard hit by this very high rate of tax, and in point of fact in recent months three firms engaged in their manufacture have gone into liquidation, and three others have discontinued these articles from amongst their lines.
I am prepared to submit to the Economic Secretary the details which are in the possession of the British Jewellers' Association. I cannot think that the Government will not take full notice of such an adverse effect on an industry that firms have to close down.
To give an example, I have here in my possession two identical cases made in Birmingham. One case carries 90 per cent. Purchase Tax and the other 60 per cent. Purchase Tax. The only difference between them is that inside one case there is a container for cigarettes, which we understand are now very harmful to people, and inside the other a powder container which all women regard as a necessity. The case for carrying cigarettes bears a 60 per cent. tax and the case for carrying face powder hears a 90 per cent. tax. How can the manufacturer compete in the export market with a case bearing a 90 per cent. tax? He has to confine himself to the production of the lower taxed case. That is the reason why firms have gone out of existence.
6.0 p.m.
I will not go into details of the articles in the list before us, some of which carry the 60 per cent. tax and others the 90 per cent. tax. What are luxuries and what are necessities? For instance, snuff boxes are taxed at 60 per cent. Is snuff more desirable than powder? The anomalies in Purchase Tax ought to be considered seriously.
On several occasions in this House I have spoken for unpopular causes. It seems that the case for the lady's flapjack or the powder bowl is unpopular in present circumstances—[HON. MEMBERS: "Why?"] I am glad to know that it is not so unpopular, from those interruptions. I have taken an interest in prison


reform, and I am pleased to know that the prison reformers themselves now consider cosmetics to be essential to the ladies who have been put in prison, and that cosmetics are considered as almost a biological necessity.

Mr. Ellis Smith: Not in Strangeways.

Mr. Yates: At any rate it has been an interesting innovation in recent times for cosmetics to be allowed in our prisons. I think there is a case to be made out for the women of the country, and I think that this continued policy of a tax upon women—[Laughter.]—I speak as a bachelor. It is a war on women, and it is about time something was done. I hope that we shall get something vastly different from the Economic Secretary than we were given earlier. I call his attention to the previous debate. Why I am asking for a straight answer is because my hon. Friend the Member for Hammersmith, North (Mr. Tomney) raised this point in the debate on the Finance Bill last year, and he used the phrase "a tax upon women". He put this point forcefully and was congratulated by the then Economic Secretary, who said:
I can assure the hon. Member for Hammersmith, North that we shall take very careful note of what he said on the subject of compacts. I have taken a full note of the points which he raised tonight, and, in particular, of those about exports. I cannot go further than that. The hon. Member made, as he always does, a helpful and thoughtful speech on this matter, and we on this side of the Committee are very grateful to him." —[OFFICIAL REPORT, 26th June, 1956; Vol. 555, c. 415.]
My hon. Friend the Member for Hammersmith, North made out the case for a reduction of Purchase Tax, because he pointed out that there was unemployment in certain firms. I have proved also by what I have said today that this is so. I want to know tonight from the Economic Secretary whether the Chancellor will consider this matter seriously, because it has had adverse effects not only upon the jewellery industry of Birmingham but of the country. I hope the Chancellor will consider this again so that we can stop the nonsense of differentiating between luxuries and necessities. I hope the right hon. Gentleman will consider it from the point of view of what is necessary for the trade of the country, what will help our export trade, what will help our balance of payments. I hope that every disadvan-

tage from which these firms are suffering today will be removed in a very short time.

Mr. William Hannan: I support the proposed Clauses, particularly the one in the name of my right hon. Friend the Member for Huyton (Mr. H. Wilson). When we are discussing Purchase Tax we are talking about one of the principal money raisers for the nation. Indeed it was the Financial Secretary himself who, in earlier stages of our debates, admitted that Purchase Tax was a revenue winner.
My hon. Friend the Member for Stoke-on-Trent, South (Mr. Ellis Smith), in an intervention or an aside earlier this afternoon, rightly said that Purchase Tax has now ceased to be used as an instrument of policy and is one of the primary revenue raisers in the country. In 1951 the total income from the tax was £290 million whereas this year the Government are expecting about £460 million to come from that source. When the late Sir Kingsley Wood introduced the tax in 1940 he said that the urgent and imperative need, both to limit civilian consumption and to obtain a new source of revenue, was the reason for its introduction.
Since that time the purposes have become somewhat distorted, and my hon. Friends the Members for Salford, West (Mr. Royle) and Ladywood (Mr. V. Yates) have described some of the anomalies arising from the tax. It has an unfair incidence. It is the purpose of my remarks to show how unfair it is that the tax is not being used with discrimination to encourage that which is desirable in the country and to discourage other features which the Government should try to discourage as a matter of policy.
For example, when my hon. Friend the Member for Salford, West was describing the various kinds of receptacles which are subject to various rates of tax, he was describing that which is very true. If I may return to the topic of musical instruments, it is ridiculous to impose a flat rate on them irrespective of any embellishment or of any type, so that the violin with which the child is provided at a cost of £4 10s. has Purchase Tax levied on it of between £2 5s. and £2 10s. Surely we as a nation should


encourage our young people in the arts. We should not merely encourage them to earn a living, but to live a decent, happy and interesting life. I submit that Purchase Tax on musical instruments is unfair because they are not luxuries. I am not trying to be facetious in pointing out that if it is said, for example, that members of the Salvation Army are indulging in luxuries, it is the height of fantasy. If it is to be said that colliery bands, boys' brigades, boy scouts and, above all, schools are spending money profligately, then we ought to have another look at the whole matter.
A 60 per cent. tax is levied on watches and clocks on which a craftsman has carried out some special work, as described by my hon. Friend the Member for Ladywood. There are lower levels of tax for ordinary watches and clocks. There is a 60 per cent. tax on certain types of cameras, but not on others. However, a 60 per cent. tax is levied upon all musical instruments whether or not they have embellishments, and this represents a penal tax upon educational facilities.
To say that the tax affects only those engaged in the musical profession and musical industry for their living is wrong. The London County Council has, at the moment, more than 100 orchestras in its schools catering for 10,000 young people who are keen to learn to play instruments. These young people are participating in a social life which would otherwise be denied them. The parents simply cannot afford the instruments because of the 60 per cent. tax, and it is the London County Council which is providing the instruments and loaning them to the children. Since 1945 the London County Council has spent £75,000 on musical instruments, and it should be borne in mind that a large proportion of that represents tax.
The point I want to emphasise is that 95 per cent. of those children will remain amateur musicians throughout their lives, and only a small number will join the musical profession. We cannot have cream without milk. These young people are encouraged to join evening institutes where they participate in social life which would otherwise be denied them, but they have to leave their instruments at school. If the enthusiasm of the

children is diminished or killed, one wonders where in future we shall find recruits to join the ranks of professional musicians.
I ask the Economic Secretary to bear in mind the fact that the 60 per cent. rate of tax applies to certain articles which have a much greater and broader value to the community than many others. In the case of musical instruments, we should encourage young people to develop their talents, for in the years to come the country will need the talents and culture that they possess.

Mr. Hirst: On a point of order, Sir Norman. I am a little confused about the scope of the debate. Some of us have been kept rather strictly confined in our remarks. I certainly was. I was under the impression that the proposed new Clause dealing with musical instruments had not been called, and I am a little puzzled to determine whether references to musical instruments are in order.

Mr. Jay: Further to the point of order, Sir Norman. It has been the custom for a number of years for Amendments to be tabled dealing generally with the rates of Purchase Tax and for us, in the course of our debates, to have a reasonably wide discussion on the specific goods concerned. If that were not the case, I do not think the House of Commons could rest content with the present method of dealing with Purchase Tax on the Finance Bill.

The Temporary Chairman (Sir Norman Hulbert): The right hon. Gentleman is correct. At the same time, I hope that the hon. Member for Maryhill (Mr. Hannan) will not go too much into detail.

6.15 p.m.

Mr. Hannan: I said, Sir Norman, that I was trying to suggest that in connection with the imposition of the 60 per cent rate of tax, there should be some discrimination in order to select less necessary and desirable goods or goods which are real luxuries as against articles which are of great value to the community and that we should encourage the good and discourage the mean and sordid.
With regard to the purchasing of musical instruments, the warning should be uttered that it is most desirable that our young people should have the best available and not have to resort to secondhand instruments which may have faults


developing and from which they may not obtain the best advantage. The tax on musical instruments is indefensible. It is a tax on tools. It is a tax of the worst sort on culture because it is a tax on creative culture. It is a tax on self-expression.
If Parliament is serious about doing all it can to encourage our people to work for a better life, and if we really mean that the standard of living shall be doubled in twenty-five years, this being achieved in a material sense by modern means of production, let us at the same time provide the opportunities for the better employment of leisure which will be part of that higher standard.
I urge the Economic Secretary seriously to consider the matter before Report and to let us know something of what the Government mean to do in the future. What is involved here is a very small part of the total income. It is perhaps less than £1 million of the £460 million which the Government seek to obtain by Purchase Tax, and thus it may be said to be an insignificant part of our total income.

Mr. Birch: In opening the debate, the right hon. Member for Colne Valley (Mr. Glenvil Hall) pointed out that over the years there had been many very long debates upon Purchase Tax. He proceeded to denounce the tax root and branch, but those of us who were in the 1945 Parliament will remember that no one then defended it with greater force and eloquence than the right hon. Gentleman. He thundered at the Dispatch Box night after night in defence of it.
The right hon. Gentleman added that he would welcome a return to what was described as the "Dutch auction" at the time when the right hon. Member for Bishop Auckland (Mr. Dalton) was Chancellor of the Exchequer, but the right hon. Gentleman certainly did not welcome it in those days.

Mr. Glenvil Hall: I am sorry to interrupt the right hon. Gentleman, but he is misrepresenting me, not that it matters very much, for this is all good fun. I said that the present system was bad and we wanted an indication from the Government of what they proposed to put in its place. I also said that some tax

of the kind was undoubtedly necessary, but what kind I did not indicate.

Mr. Birch: If I misunderstood the right hon. Gentleman, I am very sorry. I thought that the present system was not too bad. It certainly appears to provide hon. Members with considerable latitude in making the case for any industry. The right hon. Gentleman asked how long Purchase Tax would last. I can give a very simple answer. I do not know, and if I did, I could not tell him. I am afraid that the matter will have to rest there for the moment.
The right hon. Gentleman and a number of other hon. Members spoke about musical instruments. The right hon. and learned Member for Montgomery (Mr. C. Davies), with his usual skill succeeded in making a speech on the same subject on a previous new Clause. On the "tools of the trade" argument, of course, a number of tools of the trade are taxed. We rehearsed them last night crockery for hotels, stationery, commercial goods and so on. It is not unique in that respect and as a matter of fact the tax is slightly lower than it was when right hon. Gentlemen opposite left office.
Certainly a powerful case has been made. The trouble with all the different types is that it is dangerous for any trade to give an indication of the Chancellor's views, because that upsets the trade. All I can do is to promise hon. Members, as I promised the right hon. and learned Member for Montgomery, that I will faithfully report to the Chancellor the feelings expressed on this subject.
We had a most enjoyable interlude about Bentleys and diamonds. It was very pleasant and it was heralded by a very robust contribution from the hon. Member for Ladywood (Mr. V. Yates) who said that we should have no more of "this nonsense" about the difference between luxuries and necessities. That is a sentiment not always put forward by the Opposition. As the speech of the hon. and learned Member for Crewe (Mr. Scholefield Allen) indicated, Bentleys are not doing too badly at the moment and I cannot think of any very good case for making Purchase Tax on Bentleys lower than it is on, say, Austins. It was a case of special pleading for the luxury car and although there may be


something in the case—it is not usual—it would take a certain amount of justifying, especially in view of the present state of the motor car trade.
The hon. Member for Ladywood spoke about jewellery. He has a constituency interest and he spoke with very great knowledge. All I can say about that is that we have done something for the jewellery trade. We have reduced the tax from 100 per cent. to 60 per cent. which is still a heavy tax, but something has been done and I cannot promise at the moment that more will be done.
The main part of the hon. Member's speech was devoted to compacts and lipstick holders and what not. The argument of the Treasury, as he knows, is that it is difficult to distinguish the lipstick from the lipstick holder and it is very difficult indeed to have different taxes on the two. Cosmetics are taxed at 90 per cent. which is the highest rate. The hon. Member said that that amounted to a tax on women and he said that the Government were against women. Personally, I have always been in favour of cosmetics. I remember the words of the greatest living American poet:
A girl whose face is covered with paint, Has an advantage with me over one whose ain't.
That is a sentiment I share, but ladies, even those in prison, as the hon. Member pointed out, manage to cover their faces with paint in spite of the tax. We should be getting into very great difficulties if we tried to distinguish the lipstick holder from the lipstick itself.
The hon. Member quoted the example of snuff boxes, but a lipstick or powder cannot be put into a snuff box. I agree that the difficulties of drawing precise lines in Purchase Tax are appalling and one is always bound to have a certain number of anomalies, but the general principle on which the tax is worked is right.

Mr. V. Yates: The Treasury distinguishes between the cigarette case and its contents. An empty cigarette case is taxed at 60 per cent. Why cannot similar consideration be given to a case which contains lipstick? It is a matter of valuing the metal.

Mr. Birch: That is because the cigarettes inside the cigarette case are charged at a much higher rate of tax than the cigarette case itself.

Mr. Jay: This group of new Clauses has covered a great array of cases from Rolls-Royces to flutes and trombones. As was intended, many hon. Members were enabled to raise topics affecting one or other of these cases. As the case for relief varies in strength among the different varieties of things which we have discussed, I do not advise my hon. Friends to carry all this omnibus proposition to a vote. I hope that the Economic Secretary will, as he has promised, look carefully at the issues which have been raised, bearing in mind in particular that he has legal power to adjust rates of Purchase Tax by Order in the course of the year, without waiting for the Budget.

Mr. Tom Brown: If we set about the task of calling the Economic Secretary's attention to every Purchase Tax anomaly, we shall be here until Christmas. That has been shown by speeches made from this side of the Committee and the speech made from the Government side. I shall content myself with referring to one glaring anomaly, the anomaly of Purchase Tax on miners' safety lamps. Miners' safety lamps are exempt from Purchase Tax on two conditions, first, if they are approved in pursuance of Section 33 of the Coal Mines Act, 1911, and, secondly, if they are approved under the Board of Trade Regulations (Lighting Regulations), 1934.
There are two main kinds of lamp. One is the hand lamp which the miner carries to his work and which is operated by a battery. The shell and the battery together weigh 11 1b. and are exempt from tax. The other type is the cap lamp. The miner wears a cap lamp in front of his safety helmet and coupled to it is a battery which is strapped to his body. The cap lamp and the battery are exempt from tax, but the belt which the miner fastens around him is subject to tax, because it is made of leather.
The Economic Secretary said that it was impossible to distinguish a lipstick from a lipstick holder. How does the Treasury distinguish the belt from the lamp? Here is a glaring anomaly which ought to be rectified. The strap is made of leather and does two things. It helps the miner to support the battery on his back while he works, and it also keeps up his trousers. A civil servant's brief case is exempt from tax as are the braces which he buys to keep up his trousers,


but the miner in his daily work has to pay tax on a leather belt which helps him to do his work.
The Economic Secretary cannot justify that, however hard he tries to justify the tax on a lipstick holder and lipstick. I ask him seriously and sincerely to consider this and to see whether he can remove the anomaly.

The Deputy-Chairman (Major Sir William Anstruther-Gray): I understand that the belts which are being discussed by the hon. Member are in fact taxed at only 30 per cent., and so would not come within the scope of the Clause.

Mr. Brown: It is extremely difficult for me to reply to that at the moment. There is that anomaly, however, about which we feel very keenly, and I shall have to look up the point about the tax. It is an anomaly which I wish could be removed, and I plead with the Economic Secretary to try to remove it.

6.30 p.m.

Mr. Victor Collins: I should like to make a few observations upon the proposed new Clause which stands in my name, relative to the reduction in Purchase Tax from 90 per cent. to 75 per cent. I hope that the Economic Secretary will add the one or two points that I want to make to those which he has already promised to consider. In regard to his answer to my hon. Friend the Member for Ladywood (Mr. V. Yates), there is no difficulty in differentiating between a case and its contents. I can quote legion examples to this effect. One is the picnic basket, which bears a tax of 60 per cent., while its contents are taxed at 15 per cent. for cutlery and nothing for hollow ware. There are many such examples and I hope that the Economic Secretary will bear this fact in mind when considering these obvious injustices.
Generally speaking, whenever an Amendment on these lines is moved it seems to be dismissed on two grounds—first, that it deals only with articles of excessive luxury and, secondly, that it is particularly concerned with cosmetics. I submit that both grounds are quite fallacious. In the first place, the tax affects a wide list of goods, covering about six different groups. It covers calendars, postcards, letter-cards, greetings cards,

articles for dyeing, tinting, waving, curling or generally messing about with the hair, toilet requisites and perfumery. I might say, in short, that it covers cards, cosmetics and craftsmen.
I should like the Economic Secretary to look particularly at some of the chief absurdities. If calendars are modern designs they must pay a tax of 90 per cent., but if they are reproductions of works of art more than 100 years old they bear a lower rate of tax. That seems stupid to me. If the greetings cards are in three or more colours, and therefore presumably beautiful objects, they bear a 90 per cent. rate of tax. The net result is that many of these articles are not produced at all, so that the Treasury does not reap the advantage of the higher rate of Purchase Tax.
In the case of cosmetics we have only to examine the list in page 72 of the Customs and Excise Notice to see how absurd is the idea that this tax of 90 per cent. is charged only upon items of extreme luxury. The list includes blackhead removers, chin straps for correcting double chins, shaving mugs, strop oils, toothbrush holders and similar requisites. It is right to ask the Economic Secretary to look at the matter so that we can have some of these stupidities removed before we have another edition of this Customs and Excise Notice.
Broadly speaking, the 90 per cent. tax is a tax upon cards, cosmetics and craftsmen. It is a penal tax upon beauty and gullibility. It does not bring in very much. In 1955, when the tax was increased from 75 to 95 per cent. we were told that the extra revenue amounted to £2 million. It would appear that the Economic Secretary could regard it as a bargain concession because it now brings in less than £2 million, but it strikes blindly and indiscriminately. Those horrible things, curling papers, are charged at 90 per cent., presumably because the Chancellor thinks that any woman who wears them should at least be fined.
There are so many inconsistencies here. The woman who wants a home perm has to pay a tax of 90 per cent., but similar instruments used by the hairdresser are charged at only 30 per cent. If this 90 per cent. tax can be justified at all it can be justified only as a tax upon extreme luxury goods. But what


about the factory girl's half-crown lipstick, which costs about 4d. to produce? Half the selling price is tax. I do not think that we can possibly agree that things like that are luxuries. Nor can we agree that there should be a 90 per cent. tax on a corn rasp or upon nail clippers. I do not know, but it may be that the idea is that when a person uses a corn rasp it is such an exquisite relief that he does not mind paying an excessive rate of tax for it, or it may he that these anomalies remain after all these years simply because the authorities just cannot be bothered to remove them.
The Chancellor is obviously cashing in on a racket here. The profits are fabulous, and enormous prices are being charged for utterly worthless things which are sold only because people are gullible. Makers of these products can afford to pay £1,000 a minute to advertise on television, and the public think that they must have these goods.

Mr. Ellis Smith: So we should vote against the tax.

Mr. Collins: I think that I am making clear my views about the matter. I think that the tax should he reduced and the whole section, with its anomalies, cleared up. It is all so obviously unfair to tax the articles of high quality to which my hon. Friend the Member for Ladywood has referred, putting decent craftsmen out of business and injuring the export trade simply because the right hon. Gentleman has not had sufficient energy to say more than, "That 2s. worth of powder puff and powder cannot be separated from the compact which contains it and which cost £10; therefore the powder puff and the powder must be charged at a rate of 90 per cent." I ask the Economic Secretary to look into these matters and to agree that these provisions are not worthy of any Government and that the impositions should be discontinued as soon as possible.

Question put and negatived.

New Clause.—(AMENDMENT OF S. 11 OF CUSTOMS AND INLAND REVENUE ACT. 1889.)

Subsection (2) of section thirty-eight of the Customs and Inland Revenue Act, 1881, as amended by subsection (1) of section eleven of the Customs and Inland Revenue Act, 1889, is hereby further amended, as follows:—

"Notwithstanding the provisions of the said section eleven the charge under the said

section thirty-eight shall not extend to money received under a policy of assurance effected by any person dying on or after the ninth day of April, nineteen hundred and fifty-seven, on his life, if he shall have made no payment in or towards keeping up such policy during the five years immediately preceding his death".[Sir P. Spens.]

Brought up, and read the First time.

Sir Patrick Spens: I beg to move, That the Clause be read a Second time.
We turn now to a much narrower and very different subject, namely, the law relating to gifts, which we discussed to some extent upon Clause 35. This Clause seeks to get rid of an anomaly which came to light in a case decided by Mr. Justice Harman as recently as March of this year. Most hon. Members have probably believed up to this moment that any gift made by a donor to a donee would not be included in the donor's estate for Estate Duty purposes if the gift were made five years before the date of death of the donor, but there appears to be an anomaly in regard to one type of gift, and one type of gift only as far as I know. That type of gift is a fully-paid-up policy of insurance on the donor's own life.
In the case which came before Mr. Justice Harman the facts were interesting. A father took out a policy on his own life in 1912 and it becomes fully paid in 1916. At that time he made an absolute assignment and gift of it to trustees for his son, and from 1916 until he died in 1952 he had no interest in the policy or the policy moneys. He paid no premiums as it had become fully paid up in 1916. It was the absolute property of the son.
But when he died in 1952 the Revenue claimed that the policy moneys which became payable on his death had to be included in his estate and duty paid on them by the son, because, by the combined effect of Section 38 of the 1881 Act and Section 11 of the Act of 1889, policy moneys were chargeable with Estate Duty on the death of the donor
as moneys received under a policy effected by a person on his life where the policy is kept up by him only for the benefit of the donee.
Mr. Justice Harman, in the case in question, the case of Hodge, said:
There is no doubt that the plaintiff here is a donee. There is no doubt that nobody paid any premiums except the assured himself. Equally there is no doubt that no premium has


been paid, or was payable, since 1916. It comes as a shock that a policy which has been fully paid for over forty years and has therefore not needed any keeping up during the whole of that time and in respect of which there has been nothing to do but wait for the death of the assured, should now attract duty, although no beneficial interest in it passed from anybody to anybody else on his death. It has belonged absolutely to the plaintiff since 1938, twelve years before his father's death. It is a striking fact that duty should be executable under those circumstances.
I think everybody will realise that this is one of the known exceptions to the general rule that if a donor lives for five years after he has made a complete gift of property, then it is not included in his estate. Under those circumstances I am moving this Motion in order to get rid of that anomaly.

The Financial Secretary to the Treasury (Mr. J. Enoch Powell): The case of Hodge deceased in the High Court, to which my right hon. and learned Friend has referred, certainly discloses a position in the law which it is impossible to defend, that Estate Duty should be paid on a policy fully paid up more than five years before the relevant death by the person to whom it is assigned. It is the more difficult to defend that position in that if the policy were fully paid up before assignment then, although all the other circumstances were exactly the same, Estate Duty would not be payable.
My right hon. Friend therefore recognises that this position at law calls for review. However, the law has not yet been settled, since the case to which my right hon. and learned Friend referred has gone to Appeal. The Committee would agree that it is unwise to venture to set about amending the law until one knows what it is. On the other hand, I accept that the state of affairs disclosed, if it be confirmed on appeal, from the judgment of Mr. Justice Harman, calls for amendment.

Mr. G. R. Mitchison: Broadly, I agree. This is a branch of the law in which, as was argued in the leading case in which the hon. Member for Walsall, South (Sir H. d'AvigdorGoldsmid) defeated the Inland Revenue, the law proceeds by jumps. It is therefore one law of the flock of "kangaroos" which, I understand, the Financial Secretary keeps in the Treasury. It is obvious that we had better wait to see what is

the result of the appeal and then the matter might be carefully considered, not only in regard to that case, but to the possibility of making too wide a change where a change appears to be required.

6.45 p.m.

Sir P. Spens: I was not aware when I put down this Clause that the case was going to the Court of Appeal. Although the House of Commons has interfered before now with a case heard in the first instance, even though it is on its way to the Court of Appeal or to another place, it is not usual for the House to legislate until the decision of the court is known. Under those circumstances, I do not feel that I can object to the suggestion of my hon. Friend that we wait to see what is the decision of the Court of Appeal. But it is on the understanding that, if the Court of Appeal confirms the decision of Mr. Justice Harman, an opportunity will be taken to put the matter right.

Mr. Hector Hughes: What is to happen in the event of the Court of Appeal confirming the lower court after the Finance Bill is passed? Is the Minister giving an undertaking to introduce substantive legislation?

Mr. Powell: I think this is a matter which would be recognised as suitable to be dealt with in the Finance Bill.

Sir P. Spens: In view of the confirmation given by my hon. Friend, I beg to ask leave to withdraw the Motion.

Motion and Clause, by leave, withdrawn.

New Clause.—(REFUND OF INCOME TAX ON CERTAIN SUPERANNUATION PAY- MENTS TO LOCAL GOVERNMENT OFFICERS.)

(1) Subject to the provisions of this section, any person to whom this section applies and who has been charged with income tax on such income as is laid down in this section may make an application in writing to the Commissioners of Inland Revenue for relief.

(2) On receiving any such application the Commissioners of Inland Revenue shall order the amount of income tax paid on such income to be repaid to the applicant.

(3) The persons to whom this section applies are persons who were contributory employees of a local government authority before the coming into effect of the regulations provided for in section one of the Local Government Superannuation Act. 1953 (which relates to


regulations as to superannuation benefits), and who—
(a) ceased to be contributory employees before the first day of October, nineteen hundred and fifty-four, but since the thirtieth day of September, nineteen hundred and fifty;
(b) were granted under the said regulations an option as is provided for in paragraph (b) of subsection (4) of the aforementioned section one; and
(c) have in fact, taken such option.

(4) The income to which this section applies is the amount by which the annual benefits, which were paid to any person to whom the last foregoing subsection applies under a superannuation scheme in force at the time of his ceasing to be a contributory employee, exceeded the amount which would have been paid had the aforementioned regulations been in force at that time; such amount having been retained by him in consideration of the whole or of a part of a lamp sum payment to which he has become entitled by virtue of the said regulations.—[Mr. Wade.]

Brought up, and read the First time.

Mr. Donald Wade: I beg to move, That the Clause be read a Second time.
This Clause is rather lengthy but I will endeavour to move the Motion as briefly as possible. I am aware that the circumstances are well known to the Financial Secretary. The amount involved is small so far as the Treasury is concerned, but it is a matter of considerable importance to certain local government pensioners. I believe that there are only a few hundred people affected. Subsection (3) of the new Clause defines the persons who are affected, namely:
… persons who were contributory employees of a local government authority before the coming into effect or the regulations provided for in section one of the Local Government Superannuation Act, 1953…
and the regulations therein. For most of those who exercise this option it involves the receipt of a lump sum less an amount equal to the excess of actual benefits already paid over those that would have been paid if they had retired after the scheme came into effect.
The question arose whether tax was payable on this excess. If not, these pensioners would be entitled to a refund of the amount of tax paid. This matter has been before the courts, and it was decided that as the law stands at present the tax should not be refunded, for the portion of this lump sum was income liable to tax. I am asking that the money which has been treated as income should be

treated as part of the lump sum on which tax should not be payable.
That this difficult situation has arisen is due partly to the length of time taken by the negotiation of the new system of payment and partly to the time taken in issuing the new regulations. I am not complaining but am merely stating the circumstances. It would be reasonable that this whole lump sum should be treated as a tax-free payment and that the tax that has been paid should be refunded.
If the Financial Secretary considers that the wording of the Clause can be amended or improved I shall be only too pleased to accept his advice. Alternatively, if he could meet this point in some other way I should also be satisfied. I hope he will treat the proposed new Clause sympathetically as it seems fair that this small group of pensioners should receive this lump sum.

Mr. John Edwards: This is not a matter on which we should feel it necessary to take a collective view, but what I say, I think, represents the opinion of hon. Members in all parts of the Committee.
I was first involved in this matter last year, when I wrote to the then Financial Secretary. At the end of October, I took a deputation to see him representative of the County Councils Association, the Association of Municipal Corporations and the National and Local Government Officers Association. At that time the law did not seem clear. With the passage of events we now know that, in accordance with a judgment given recently by Mr. Justice Harman, the view which was put forward on behalf of those bodies is not good in law. In those circumstances I do not want to traverse the ground in any technical sense but I want to ask the Financial Secretary and the Government whether they would not feel that it would be just and fair in all the circumstances for them to change the law so as to permit the refund of tax paid on this element.
In theory where a widow had received a lump sum payment it would be possible, although I think it would not happen in practice, that if the law were changed some part of that payment would attract tax. I do not want to put this forward on any precise or strict basis because I


do not believe that is possible, but only on the ground that there are a number of people who feel aggrieved, and who are clearly in the position that if the changes in the law had been made earlier they would not have been subject to tax because they would never have received this element in their pension at all. I hope that in the circumstances the Government will feel able to deal generously with quite a small but meritorious group of former public servants.

Mr. Powell: I appreciate the manner in which the proposed new Clause has been moved and supported because it relates to a very difficult problem, though one which concerns only a limited number of people. It arises, as the hon. Member for Huddersfield, West (Mr. Wade) explained, from changes which were made in the superannuation conditions in 1954. Those changes were twofold. A lump sum plus a lower pension was substituted for a higher pension. The second change was that a widow's pension was introduced. It was decided at the time of the Regulations to job backwards, as far as 1950, so as to enable both types of persons affected to put themselves as near as possible in the position they would have been if the Regulations had had effect from 1950, by enabling the pensioners to refund the excess of their pension and get a lump sum, and by enabling widows to draw as a lump sum what they would have received as pension in the intervening years.
The question before the Committee is whether those compoundings, those payments one way or the other which were made after the Regulations came into force, should be treated for tax purposes as though they had actually been made between 1950 and 1954 in the form in which they would have been made if the Regulations had been in force in those years. The effect of that, as the right hon. Member for Brighouse and Spenborough (Mr. J. Edwards) recognises—and I quite understand the presentational reasons why only one of the consequences is featured in the proposed new Clause—is that there would be a refund to the pensioners of the amount of tax paid by them on the excess

pension drawn in the intervening years, but that the widows would have to refund that part of the lump sum they had received which represents the tax which would have been payable on the pension receivable by them between the death of their husbands and 1954.
So the first question which the Committee has to decide is whether there would have been greater hardship one way or the other from this change in the tax law. I submit that the hardship which would be involved—it would necessarily follow—in clawing back a portion of the lump sum from the widows affected is greater than the hardship involved in the tax actually paid between 1950 and 1954 by the pensioners being retained; so that, on practical grounds and on the balance of hardship, I recommend the Committee that it is wiser not to alter the law.
There is a very important general consideration which leads in the same direction, and that is the undesirability, in however deserving the class of case, of altering the tax law retrospectively so that payments which were made in one form have to be treated as though they had been made in another form. That situation is not unique; it arises when divorce court orders are varied so that refunds one way or the other in respect of payments already made become payable. It may happen that there have been mistakes in settlements or in seven-year contracts. In none of these cases, as the law stands, are the tax consequences undone, even when the compensatory payments come to be made.
It would be extremely unwise for us to get into the position of altering tax obligations retrospectively. It will readily occur to members of the Committee that considerable opportunities for tax avoidance would be created if it were possible in subsequent years, by repayments of one kind or another, to alter tax liability in years gone by. So, on those two grounds, the particular ground of the balance of real hardship in the practical case and the general ground of the inadvisability of retrospectively altering tax liability. I recommend the Committee that the law should remain as it is at the moment.

Question put and negatived.

New Clause.—(REMOVAL OF TREASURY'S POWER TO CONSENT TO MIGRATION OF A COMPANY.)

Section four hundred and sixty-eight of the Income Tax Act, 1952 (which restricts certain transactions leading to the migration of a company outside the United Kingdom), shall have effect as if there were left out of that section (a) in subsection (1) the words "unless carried out with the consent of the Treasury" and (b) subsection (4).—[Mr. Mitchison]

Brought up, and read the First time.

Mr. Mitchison: I beg to move, That the Clause be read a Second time.
This proposal relates to what is commonly called "migration of companies." A company resident in this country cannot move to another country so as to be non-resident in this country without the leave of the Treasury. Moreover, it cannot take certain steps which have to some extent a similar effect. That legislation was introduced in 1951 and was incorporated in the Income Tax Act, 1952. Though there is a good deal to be said for the proposition, to which I shall refer in a minute, it was really a temporary measure.

It being Seven o'clock, The CHAIRMAN left the Chair, further Proceeding standing postponed until after the consideration of Private Business set down by the direction of The DEPUTY-CHAIRMAN OF WAYS AND MEANS under Standing Order No. 7 (Time for taking Private Business).

Mr. SPEAKER resumed the Chair.

LIVERPOOL CORPORATION BILL [Lords] (By Order)

Order for Second Reading read.

Motion made, and Question proposed, That the Bill be now read a Second time.

7.1 p.m.

Mr. T. W. Jones: I beg to move, to leave out from "That" to the end of the Question, and to add instead thereof:
this House declines to give a Second Reading to a Bill which proposes to uproot an entire community despite their strong and reiterated objections; takes no account of the profound and widespread opposition in Wales to its provisions; and is contrary to the public interest in that it seeks to enable a single undertaking to embark on a scheme of such magnitude before the House has had an opportunity of considering the report of the Committee set up by the Minister of Housing and Local Government and Welsh Affairs to inquire into the conservation and distribution of water resources in Wales.
Many a decade has passed since a representative of Wales has had an opportunity to speak in this House on behalf not only of his own constituency, but also of the whole Principality. I hope that I shall not be deemed presumptuous when I claim to have that privilege this evening, because, as I said here recently, and as was reiterated in another place, the people of Wales have never felt so intense on any subject this century as they feel about the question which we are discussing this evening.
I am happy to think that I have the backing of the Welsh Parliamentary Party which is composed of representatives of every party in the House. Even the Chancellor of the Exchequer, who has just left the Chamber, is a member of this illustrious body.

Mr. Charles Pannell: My hon. Friend should not put his money on him.

Mr. Jones: Protests against this Bill have been received from hundreds of people—

Mr. Desmond Donnelly: Thousands.

Mr. Jones: I think my hon. Friend is right—and from every organisation which one finds in Wales, including political parties and cultural and religious movements.
The other day we unfortunately lost our Archbishop. Reading an account of his death in the Liverpool Daily Post I read the following observation:
He had shown interest in the 'Liverpool Corporation's reservoir plans in Wales, and in November, 1955 he wrote to the Corporation on behalf of the Bench of Bishops asking for information on the subject for the sake of the Welsh people.
I ask the House to note that last phrase—
…for the sake of the Welsh people.
The Archbishop knew of this intense feeling which one finds in Wales concerning this Bill.
As I said, I have received hundreds of letters from religious organisations. Only yesterday I received the last one from such a body; it was from the secretary of the Congregational Union of Pembrokeshire, Carmarthenshire and Cardiganshire—in South Wales, far from Tryweryn. The letter accompanying this protest stated that at a meeting held last week representing 217 churches there were actually 250 representatives present who unanimously passed this resolution of protest.
I am sure the House will allow me to say that Wales has been very generous indeed in the provision of water for people across the border. Proof of this is the fact that local authorities outside Wales own twice as much water surface in Wales as is owned by the people in Wales.
It seems to me that before a Private Bill of this kind is accepted by the House, it should fulfil three fundamental conditions. First, there should be proof of need beyond dispute. Secondly, the powers requested should be such as to be reasonably related to meeting this need. Thirdly, it should be shown that the need could be met in no other less objectionable manner. That is to say, the rights of those in possession should be guarded to the very last.
I think the House will agree with me that in a Private Bill of this kind those three fundamental principles should be established. I put it to the House that on none of these fundamentals can the Liverpool case be sustained. Indeed, the weakness of the case must surely be brought home by the fact that the original

Bill, after eighteen months of careful consideration, so it is claimed, was radically and hurriedly changed some time between the Second Reading in another place and the time for its examination. A Bill can be expected to be changed to meet the objections of the various opposing petitions, but a late and radical change in the nature of the Bill cannot but reflect on its original merit, and even now its weaknesses are glaring.
As hon. Members will be aware, the Liverpool Corporation says that it needs an extra 65 million gallons of water daily to cover the level which it says its demands will have reached in fifty years time. In order to be able to take this water from the River Dee we find that in some mysterious way the Corporation and the River Board have, since the Second Reading last February, decided that another 57 million gallons daily must run waste into the sea. In other words, the Corporation itself wants only 65 million gallons daily, but in the next breath it demands 122 million gallons daily from Wales.
Dare I suggest that this sudden zest for wasting 57 million gallons of water daily —more than the entire needs of the City of Birmingham, for instance—be related to the fact that the Corporation suddenly realised that to supply the estimated requirement of 65 million gallons daily requires a reservoir only one-third the size of the one which the Corporation proposed to establish? As a matter of fact, I would remind the House that the Merionethshire County Council was amenable to Liverpool having this smaller reservoir. They met at Chester, and the Merionethshire County Council suggested that there were other schemes which could be put into operation, but Liverpool would not have it.
Indeed, even to cover the inflated requirement of 122 million gallons daily a reservoir half the size of Tryweryn would suffice. Even to grant them 122 million gallons daily a reservoir half the size of the one proposed would be quite sufficient. Can it be that Liverpool suddenly began to see, what was clearly shown before the Select Committee, that the Tryweryn Reservoir would be yielding nearly four times the amount of water which Liverpool says it requires and that a last minute effort has to be made to make things look a little more respectable? I am convinced that that was the


reason because tonight it demands from us four times the amount which it claimed was necessary.
Many an hon. Member has told me this last week that he would like to be satisfied that other sources are available for Liverpool, and it is only fair that I should consider that. I think I can soon convince the House that those sources are available, and readily available. To me the outstandingly interesting thing about the Liverpool evidence is the way in which no source except this source in Wales will suit Liverpool.
The original plan contained requests to extract water from the River Mersey and to retain compensation water from the Rivington sources. For some odd reason both those requests were withdrawn from the Bill as presented. It is not now proposed to extract water from Liverpool's own River Mersey. It is true that the retention of the Rivington water was objected to and it is very nice to see that the Corporation was amenable to objections. I should like to know why this substantial source of supply is so easily disdained. The Corporation must have Tryweryn. Why? The Mersey water is always available; it is its own, and no one can take it away from Liverpool.

Mr. J. T. Price: I wish to ask my hon. Friend a question following the question he is postulating. Has he ever seen the River Mersey as it flows through Stockport and Manchester and its tributary, the Irwell? It is nothing more than an open sewer and would not be suitable for use as drinking water.

Mr. Jones: I can only ask my hon. Friend to have a look at the Thames. I can assure him that I crossed the Mersey before he was born. The River Mersey can wait the convenience of the Corporation. Just now the job is to get people from the Tryweryn Valley and there is no need to be particular about the excuses.
Let us consider another possible source. Need Cwm Tryweryn be impounded in order to supply water from the River Dee? The minimum flow of that river is laid down as 55 million gallons daily, but for most of the year its average flow is ten times that amount—500 million gallons daily. Why cannot the Corporation use that superabundance of water

when it is available through most of the year and reserve its present reservoirs for the purpose of using them during dry weather? There is water in abundance there, 500 million gallons daily, which can be utilised and the water in Lake Vyrnwy in Montgomeryshire could be reserved. While the Tryweryn dam is being constructed the Corporation actually plan to purchase temporarily from other authorities the rights of water they are permitted to extract from the River Dee, but which it does not use.
Liverpool could obtain River Dee water during most of the year merely by applying for an order to do so, but, no, it must have Tryweryn. As the House knows, Liverpool also possesses a very large lake in Montgomeryshire, a very large lake indeed, known as Lake Vyrnwy. Yesterday we received a memorandum from the eminent water engineer, J. F. Pownall. I want to quote what he said concerning the use that can be made of that reservoir.

A SCHEME FOR OPERATING VYRNWV RESER- VOIR IN CONJUNCTION WITH GROUND WATER STORAGE

To Secure increased water supplies economically with some Flood Relief Effect.

The pipe line from Lake Vyrnwy to Liverpool passes for some miles North-West of Oswestry over a plain which is underlain by a very porous red sandstone. The proposal is to develop storage of flood waters by way of percolation into this sandstone. The principle is that of operating surface water source in conjunction with underground water reserves, which is advocated by Dr. Stevenson Buchan in a special article in the Financial Times. 26th June…"

I do not read the Financial Times, so I did not see that article. The memorandum also says:

MODE OF OPERATION

At present the water Engineer must maintain the Vyrnwy Reservoir completely full throughout the winter, because he has no means of foreseeing an early start of a drought year. Being so completely full, the reservoir can retain no floodwaters which must spill over the crest. But with a conjoint operation, it is proposed that the reservoir should be kept 5 feet below crest during the winter, and in a position to fill up with freshets, which come down very quickly, as they occur land with flood relief). Then in a period of a week or two this extra water can he passed down the pipe line to the sandstone area. Here an array of about 16 bore hole wells with adits, these to command an area of about 25 square miles with storage down to about 150 feet depth. The Vyrnwy water is passed down the wells and absorbed by porous rock during the


winter and is available by pumping as an addition to the reservoir water during summer or it may be reserved against a dry year. An additional supply should be realised as average, of around 20 million gallons a day for less than £2 million. The water as pumped from the sandstone would be harder than Vyrnwy water, but very pure, and would be admixed with direct Vyrnwy water"—

that is, by utilising Liverpool's present sources of supply.

I think I have dealt very fairly with the questions put to me by hon. Members who have asked if Liverpool has other sources of supply. Of course it has, far greater supplies than it could get from this large reservoir which it is intended to set up in the Valley of Tryweryn.

I will now indicate and illustrate why Liverpool really demands this enormous water supply. The increase in the supply of water in Liverpool for domestic purposes during the last thirty-five years rose from 22·59 million gallons a day to 26:97 million gallons a day, a net increase of only 4 million gallons a day. The increase in domestic use of water in Liverpool has increased by only that amount, but from 1920, when water used for industrial purposes was 8·25 million gallons a day, it has risen to 20·23 million gallons a day in 1955, an increased consumption of 22½ times over the same period of thirty-five years.

It is quite clear from these facts that the additional supply is really needed for industrial purposes. So Liverpool is in this adventure, I am going to suggest, for the sake of profit out of the sale of water for industry. [HON. MEMBERS: "Hear, hear."] At the present time, water is being sold by Liverpool to industries at 10d. per 1,000 gallons. The total annual turnover from water sold by Liverpool last year came to £1,078,000. Over 70 per cent. of this water came from Vyrnwy, Welsh water, in that sense, and good water it is, as everything from Wales is good.

Liverpool gets that water for practically nothing. Indeed, Wales does not benefit at all nowadays even from the rateable value of this particular lake, because every £1 it receives from Liverpool the Chancellor of the Exchequer takes by reducing the equalisation grant. Therefore, it means nothing to it. Indeed, last week the Liverpool Daily Post had to take the Corporation to task because, it said,

now when this Bill was before Parliament it was asking Montgomeryshire to reduce its rates. "How ill-timed" says the Liverpool Daily Post. Its own paper telling it off and saying how ill-timed it was to make a request of this kind asking Montgomeryshire last week to reduce the rates.

In addition, while Montgomeryshire gets nothing or practically nothing for its water, Liverpool gets it for one-eighth its value and sells it at an enormous profit. In addition to using water for domestic consumption and sale to industry, Liverpool also sells the water in bulk to other authorities, and the bulk sales have gone up from 5·88 million gallons a day in 1920 to 11·79 million gallons a day in 1955.

It will therefore be seen that the true reason for the Tryweryn scheme is not that the water is required to quench the thirst of the people of Liverpool—in any case I think that they very often use something else for quenching their thirst. It is not required for that purpose. It is wanted by Liverpool for industry, and for resale to industry. Merionethshire, in which the Valley of Tryweryn is situated, has already provided the C.E.A. with one of the largest reservoirs in the country for generating and supplying electricity to the national grid. Two months ago, the same authority commenced the construction of another reservoir in connection with a pumped storage scheme, which is reputed to be the largest in the whole of Europe. All that we now have left—and I want to emphasise this—is this catchment area for the provision of water for industries which we hope to establish in that area.

The population of Merionethshire is dwindling year by year; it is going down and down. Our great problem is that of depopulation, and desperate efforts are being made in North Wales to secure industries. On 17th December last year Alderman John Braddock—I believe closely connected with an hon. Member of this House—spoke to the electors of Liverpool. He said:
We have seen these Welsh people, who, because of the failure of their own country to provide a livelihood for them, have left their own land almost depopulated
I should like to say to Alderman John Braddock that those people have left because they are too proud to live on the


dole. They are too proud to live on National Assistance and they have gone out to seek their livelihood, but they are yearning to come back, and we intend to have them back by establishing industries within our own area. The first demand will be for water. But we shall have no water if this Bill is passed tonight.

I wish to re-emphasise that this is no parochial opposition. Wales and England have lived together as equal partners for centuries. It is the oldest political alliance in the whole world and, indeed, is an example of how two nations with diverse traditions and different languages can live in partnership. I want the House to appreciate that the only English that I speak is here in this House. There is no need for me when I go home to speak any English; every word is spoken in Welsh. We have our own language, but in spite of that and in spite of our different traditions and of our different languages we have lived together in amity and friendship.

England has given a great deal to Wales—I do not deny it—but the traffic has not been one way. One of the things that we have given in abundance to England is water. Vyrnwy, Elan, and Glaerwen are household names in England. Therefore, it cannot be said that we begrudge meeting the needs of our neighbours. There are, however, limits beyond which we should not be asked to go without a proper national appraisal, both of our own needs and those of the great industrial centres of England, including Liverpool.

I want to refer to the people of Tryweryn who are most intimately connected with the provisions of this Bill—the people of Capel Celyn who are going to lose their homes in which they and their forefathers have been living for centuries. They are an important part of the Welsh community and they are unanimously opposed to the Bill. They do not wish to be uprooted from their houses. These people love their present homes and love the valley in which those homes are situated.

The other day, the Minister for Housing and Local Government and Minister for Welsh Affairs went to that valley. I will quote what he said:
This is a lovely part of the world.
I am glad that he went there and saw this lovely part of the world—he might

not see the next—[Laughter.] So I am glad he has seen the lovely part of this world, and yet this is the valley which will be flooded if this Bill is passed tonight by this House. These people have a right to he heard in this House. If this House stands for anything, it stands for the protection of minorities. It stands for the weak against the strong, for the poor against the wealthy. That is the glory of this honourable House.

Would this House allow the Valley of Avon to be flooded and Stratford to be covered? Of course not. No one would oppose that more than myself—I am sure of that. Any village community, whether in England or Wales or Scotland, has a right to be protected by this ancient House.

I appeal to the House tonight most fervently and most sincerely, because its action tonight will decide this issue finally. I appeal to the House, with all the eloquence and fervour I possess, to extend its protecting arm to Capel Celyn. By so doing, it will be acting in the highest Parliamentary tradition.

I want the House to tell Liverpool: "You have not proved your need. You have greatly exaggerated your claim. Seek those other sources that have been pointed out and let the people of North Wales use this last catchment area for their own use and the future use of industry and populations in that part of the country."

7.32 p.m.

Mr. Goronwy Roberts: I beg to second the Amendment.
My hon. Friend the Member for Merioneth (Mr. T. W. Jones) has ably and attractively put the case for the rejection of the Bill. It is important at the outset to realise is magnitude. It seeks to create an enormous reservoir in the Valley of the Tryweryn by building a dam approximately 140 feet high and some 600 yards long. This would entail the flooding of more than 800 acres of farm land and would render another 200 acres unworkable. It would also mean the total submersion of the village of Capel Celyn, its school, its chapel, its post office, its burial ground and its dwellings. Sixteen farms would be drowned or rendered useless. Five miles of roadway would have to be replaced and four miles of railway would have to


be relaid, if, indeed, they ever were relaid.
The objections to this massive project are many. There is, first, the quite extraordinary opposition of the people of this threatened valley. From the start, they have been unanimous and completely uncompromising about the provisions of the Bill. There is also the profound indignation, amounting to shock, which has swept throughout Wales, and even beyond Wales, because of these proposals, coming as they do after a long series of similar incursions and also because of the insensitivity amounting to arrogance with which these proposals have been put forward. There is, however, a third objection, on which I wish to dwell this evening.
This is not the way to tackle the vast and vital problem of the conservation and distribution of water. Liverpool, understandably under the present system, is thinking of itself. This House must think of the whole of Britain. Liverpool is a city for which I have great regard. All of us in Wales have a deep affection for Liverpool.
Liverpool is not the only place in the country which is in need of water. The consumption of water per head in Britain has practically doubled since 1938. The demand is growing all the time everywhere. London is now using, I am told, 275 million gallons a day, mostly from the Thames, and it is nearing the limit of possible extraction from that source. In the south and southeast of England, I am told by hon. Friends of mine, some of the bore wells are now throwing up saline water.
In Wales itself, the great steelworks of Margam, the greatest of their kind in the whole of Europe—[An HON. MEMBER: "The whole world.")— yes, the whole world—are threatened with closure because of lack of water—and that in Wales. No doubt, hon. Members from all parts of the House could duplicate these examples of the growing need for water in every part of Britain. It is a commentary on the anarchy which presided over the system of obtaining water in the past.
This Bill can only perpetuate and intensify that anarchy. Indeed, it is not an ordinary water Bill at all. It seeks

to confer on a single municipality—a worthy municipality—a monopoly on the resources of one of the greatest water catchment areas in Wales, and probably in Britain. Once that monopoly is conferred by Parliament, the whole of those vast resources will be lost, not only to Wales, but to the rest of Britain, except on terms to be dictated by that one municipality.
Already the water economy of this country is chaotic enough. Every water engineer of standing—people like Professor Balchin, Dr. Stevenson Buchan and Mr. J. F. Pownall—has been, and is, urging that a proper plan, comprehensive and equitable to all interests and areas, should be prepared. We say that it is time to end the anarchy that exists in our water economy. It is certainly not the time to add to it, as the Bill undoubtedly would do.
Only the most overwhelming evidence of need and evidence of the absence of alternative sources could possibly justify a scheme of this kind or a scheme even approaching the magnitude of this scheme. A proper question to ask, therefore, is: What are the real needs of Liverpool? The Bill anticipates extracting an extra 65 million gallons daily for what, we are told, are urgent domestic and industrial purposes.
Let us see how urgent those purposes are, beginning with the domestic side. I have with me the transcript of proceedings before the Committee, in which the evidence of the Corporation water engineer shows that in 1901 the domestic consumption per head in the North Merseyside area—that is, the area concerned in the Bill—was 21 gallons per head. In 1946–47 it was 30 gallons per head. That is not a great increase over nearly half a century, and it is nothing like the increase in other parts of the country in the same period. In 1955–56, the consumption was actually down to 28¾ gallons per head. That is to say, in the last ten years or so the domestic consumption per head in this area has gone down.
Let us take another test—again from the Liverpool water engineer's own figures. Table 3 gives the population for the North Merseyside area, including Chorley. In 1938–39 the population was 1,104,000; in 1955–56 it was down to 1,098,000. So much for the urgent


domestic need—the population is down, and so is the consumption per head.
What about the industrial need? In 1938–39 these unmetered supplies, as they are called, amounted to 27·6 gallons per head daily. By 1946–47 they had increased only to 30 gallons per head per day, and by 1955–56. ten years later—a period of great expansion throughout the whole country—they had only risen to 31½ gallons per head per day. Where is the industrial justification for this grandiose scheme? The only answer, apparently, is that in the future these demands will, perhaps, grow. Well, any area, any city, could say that—many of them with considerably more justification than Liverpool.
We in North-West Wales are anticipating an increase in the industry that we can provide for our people—all of it processive industry. If this Bill is passed, where is the water to come from for our industry? I know that my hon. Friend is looking forward to seeing a wood pulping factory being erected on the banks of the Dee to coincide with the rapidly maturing forests in the West. Where is the water for a single factory like that to come from once the monopoly is granted, by this Bill to this one municipality? And let no one say to me that Liverpool is prepared to make grants of water for local needs. Anyone who reads the transcript of evidence will see that, at best, the answers on this point were evasive and, at worst, they were downright misleading.
Once this source goes, where is the water to come from? Surely, the answer, in all equity and reason, is that the whole field of need and resource throughout Britain should be examined and a balanced policy of conservation and distribution prepared. Such an examination is, in fact, proceeding into the resources and needs of the whole of Britain—splendid—and on 7th February last a special inquiry was authorised by the Minister for Welsh Affairs into the position in Wales. The reason for setting that Welsh inquiry afoot was, as the Report of the Council for Wales states, the controversy and the anxieties aroused precisely by the proposals contained in the present Bill.
I cannot understand how, having taken that eminently reasonable step of appointing a proper authority to examine the

resources of Wales and what Wales can contribute not only to its own needs but further afield, the Minister should now tolerate, let alone lend his authority to a major project of this sort which, if it goes through, will make a mockery of him and of his inquiries.
There is nothing to prevent some other major authority comparable to Liverpool from saying in the meantime, "You gave in to Liverpool—you must give in to us. We, too, are looking to the future. We, too, hope to have more industry some time in the next fifty years. We know a river, and we know a little town or village that we would like to inundate. You must give your imprimatur also to our scheme." There is nothing to prevent a rat race by the major local authorities, all reaching out for every surviving source of water up and down the country.
I say to the Minister that the best service he can do to Wales and to the whole of Britain tonight is to counsel the promoters of the Bill to withdraw it and to start afresh so that a reasonable, sensible and equitable scheme can be devised whereby the immediate needs of Liverpool are satisfied and the rest of the country, particularly the great cities, is enabled to secure its future requirements.
There are many other arguments that can be adduced against this Bill. So far, the debate has been a temperate one—as is appropriate to such a subject. I will not delay the House by dealing with some of the questions of which my hon. Friend spoke, though they are close and dear to my heart also, but I will remind the House, as he did, that there are human rights involved here. I am told that there are only seventy people in the Treweryn Valley. Whether there are seven, seventy or seven hundred, there is an alternative way of obtaining this water without expelling—because that is what it will come to —these people from their homes, and the homes of their fathers.
We have heard an outline of the scheme proposed by that eminent water engineer, Mr. J. F. Pownall. Let that scheme be examined. If I might say, so, I would advise my Liverpool friends to examine that scheme in the interests of their ratepayers. The vast scheme that is now proposed will cost at least £20 million—


probably £30 million; the scheme propounded by Mr. Pownall would cost only £2 million and would avoid the inundation of this valley.
This is a question of human rights and of reason, and also of the larger benefit to and needs of the whole country. The country needs water—more and more water. Wales can contribute signally to that end, but Wales must be considered in the organisation of that plan. Do that, and all the Welsh contribution will be multiplied, because with every gallon that flows from the Welsh hills, 10 million gallons of good will will flow with it.

7.49 p.m.

Sir Victor Raikes: I support this Liverpool Corporation Bill, which has been so eloquently criticised by the hon. Members for Merioneth (Mr. T. W. Jones) and for Caernarvon (Mr. G. Roberts) with a debating skill and a courtesy which the House as a whole must appreciate. I, too, shall endeavour to use a completely temperate voice in dealing with our case, which, by Private Bill procedure, is very properly brought before the House.
It is a little difficulty for me now, after speaking in this Chamber last night on port, to find myself brought down to water. [HON. MEMBERS: "Up."] Well, up. I shall try to do my best. I have, at any rate, one foot in each camp, because, while I am a Liverpool Member, my residence is in Wales.
I would venture to suggest to the hon. Member for Merioneth, when he underlines, and underlines very rightly, the benefits which Wales has brought to Liverpool and Merseyside, that it is not entirely a one-way traffic. When he talks of the fact that Liverpool and Merseyside need this water, he says for profit, whereas I say for employment, for the employment of our own people. Whether they reside in Wales or in England, they are the same people who have the same need, wherever their birthplaces may be.
Indeed, only a little time ago, in my own little county town of Mold, we should have been actually devoid of any water by this week, owing to the load on our own supplies nearby, if it had not been that we had been able to get water through the Birkenhead people to cover our needs. Therefore, it is fair to say

that we must look at this matter on a two-way, rather than a one-way, basis.
The hon. Member for Merioneth, I think very properly, said that in his view the Liverpool Corporation ought to show that it needs a greater supply of water, that the need should be a reasonable need, and that it should be shown that every effort had been made to supply that need in less objectionable ways than those proposed in this Bill. I am sure that no one would object to an argument put forward as concisely as that, and that is the type of argument which, to the best of my ability, I shall endeavour to meet.
First of all, on this question of the need for more water, I think the House knows pretty well that as matters stand today, broadly speaking, and taking domestic and industrial needs, because I am not going to divide them up, taking the needs of Liverpool and those areas which the Corporation covers and supplies, which go far beyond the City of Liverpool—and that is sometimes forgotten—taking these areas, our need today is about 65 million gallons per day. Looking at it from the point of view of Liverpool, we have said that, taking everything into account, including our supplies to the twenty-four other areas supplied by Liverpool, we have had a steady increase in demand over a period of years.
In fact, during the last five years, apart from 1956–57, for which there are rather special reasons, we have had an increased demand of about1½ million gallons per day. If we take our existing source in Lake Vyrnwy, if we have a period of two or three dry years, we find that we cannot draw more than 58 million gallons per day from this source. In fact, in 1956, we were obliged in Liverpool to make very special temporary provisions, in which we were helped by Manchester and elsewhere, to cover a deficit of water.
We know from all the examinations that we have made that we are going to have a continued increasing demand, though slightly less per year, in my view, than during the last five years—about I million gallons a day, or perhaps just under, as against the 1½ million gallons per day which we found during the last five years. The figures on which we have based that calculation have been accepted as being reasonable by the Ministry itself.

Mr. Arthur Moyle: No one disputes the figures of consumption by the Liverpool community of their water supply, but that increase is common—is it not?—to the whole country, and not peculiar to Liverpool?

Sir V. Raikes: I do not think I suggested to the House that the fact that we are having this increase is merely a peculiarity of Liverpool. Indeed, I should be foolish to do so.
What I am suggesting is that when we have got, as we have on Merseyside, a great industrial area covering 100 square miles and with over a million population, with increasing industry and so on, the Liverpool Corporation would be mad if it was not prepared to plan ahead when it found this difference between its existing supplies remaining static and the increase year by year in the supply which is being demanded. If the Liverpool Corporation merely shrugged its shoulders and said, "We know the increases are going on, but we must not plan ahead," it would deserve very ill of the people of that great city, and I think we should all be agreed about that.
The only point I am making at the moment, and I think it is a perfectly fair one to make, is that the experience of the past five years, the needs of industry and everything else, on which we are basing our plans for the next five, ten or fifteen years, indicates that existing supplies of water are not enough for that great industrial area of Merseyside.
Now, we have to consider all the other points which are really germane to this issue. The hon. Member for Merioneth made various suggestions of alternatives. I hope I am carrying the House with me so far in saying that there is a need for greater supplies of water for that area in the years that lie ahead. How can these needs best be met? The hon. Member for Merioneth threw out two suggestions. I may say that in Liverpool many schemes have been considered during the past few years. Various other smaller schemes in Wales have been considered before this one, but the trouble with each one of these is that either it involved the flooding of a good deal more good agricultural land than does the present scheme, or the supplies which we were going to get were so small and so comparatively costly that the scheme

was really not worth while proceeding with. [An HON. MEMBER: "Why not use the Mersey?"] Of course, if we could use the Mersey for our needs we should not want to go searching for water into North Wales to any considerable extent.
We have the Mersey at our door, but the problem there is that we could not endeavour to use the Mersey in the state in which the Mersey is now, and to make the water of the Mersey suitable would cost so much as to be not only uneconomic but exorbitant, and even prohibitive. We called in all sorts of expert evidence to examine that possibility, and that evidence was given before the Committee in another place a short time ago, when the Bill was considered in another place. Incidentally, the Bill was passed through Committee.
It is useless to expend enormous sums of money in order to try to turn the River Mersey in its present state into a water supply for the City of Liverpool. I only wish that it could he done. [An HON. MEMBER: "What about water from the Dee?"] The Dee? There would have to be a big reservoir. In any case, in a populous and industrial area there must be a constant supply of water. One ought not to rely on getting extra water through flooding and so on at some times. There must be a regular supply. That is why the great reservoirs are used more and more for our great cities, to ensure regularity, which cannot be guaranteed by an ordinary river like the River Dee. That is why those other schemes were turned down, for that is why they were proved to be impracticable.
I come to another matter raised by the hon. Member for Merioneth, which was, perhaps, from the debating point of view, the strongest. I can say with all sincerity, while the leaders of Liverpool Corporation belong to a different party from that to which I belong, that I know that every effort was made to try to find the best way of getting the water which is needed not only by the Corporation but, as I said before, for at least twenty-four other bodies in industrial North-West England. A small scheme would not provide us with enough water to deal with the increasing demand during the next four or five years. Is that good planning to pursue a sort of piecemeal method of trying to find water?

Mr. Cledwyn Hughes: That is exactly what Liverpool is doing.

Sir V. Raikes: I do not think we are pursuing a piecemeal method. If every two or three years we try to find a new small source of supply, we shall not build the requisite water supplies for the years that lie ahead. It is totally contrary to the whole principle on which industry, whether nationalised or privately owned, is planning ahead, in an endeavour not to have to make changes every few years.

Mr. Raymond Gower: My hon. Friend has said it is most important to plan ahead for many years. Would it not, therefore, be in accordance with that that those who desire to plan ahead in the City of Liverpool and elsewhere should wait a short time, perhaps a year, and then be able to plan with greater knowledge, which we shall have when the committee which my right hon. Friend has set up has made its report?

Sir V. Raikes: I think my hon. Friend has raised a very fair question, which I expected would be raised. So far as one can judge, that report may not be in the possession of my right hon. Friend until 1959 at the earliest. It may be—I think it is probable—that when it does appear in 1959 it will make no difference whatsoever to the scheme that we have to develop—except this, that the deficit of water at one end and the demand at the other would increase and that another two years would have to pass before the reservoir could be developed. As it is, under the present scheme, before we have water from the new reservoir, another seven or eight years will pass, years of great difficulty, incidentally, to industrial Lancashire. That being so, as the scheme will be likely to be the same in two years' time, we prefer to move as rapidly as we can to get these supplies as early as we can for the needs of the foreseeable future.
The hon. Member for Merioneth said, "After all, if you take our water we can never get it back except at a price You take the water and it is possessed by a monopoly." I would say to the hon. Member for Merioneth that that water has not been used for industrial purposes in North Wales over many years, and there is no great sign that North Wales is preparing some vast plan of expenditure for industrial development of the

sort and degree that we have in the industrial North-West. I am quite certain that those who are connected with Liverpool Corporation would be only too happy upon the most reasonable terms they could, if more water were to be needed in North Wales in the near future, to give any reasonable assistance in return for any supplies which are taken from an area which at the present time shows no great signs of having or of being likely to have the industry to consume the water, which will be available in reservoir and piped if this scheme goes through as is planned.
The House will forgive me if I have taken a little time, but honest arguments require fair answers, whether one agrees with them or not, and I have been trying to give those answers. There is another aspect of this matter, an aspect which was pointed out movingly by the hon. Member for Merioneth. That is the position of those who will be dispossessed if this scheme goes through. I agree that whether the number be seventy or whether it be 700 the principle is the same. I do not disagree on that, but what I do say, and I say it with all the emphasis at my command, is that if it is decided that in the interests of a large number of people the rights of a very small number of people are affected, then, subject to proper safeguards for the minority, the right of the majority must prevail.
I think it is clear that if the land is flooded that will make very little appreciable difference to agriculture. Of course it will make a little, but no one would suggest that those six farms are farms which have a significant effect upon food production. The individuals who live there, and the individuals who live in the hamlet which is to be submerged, have rights, and they are rights about which Parliament should be very clear.
What I mean is this. I know that the Corporation—I have no reason to doubt its good faith—says it wishes to rehouse and resettle those seventy people. In my view it is a case in which there must be generosity. It is not enough to say, "We can take their land and we can put them on precisely equivalent land and in precisely equivalent houses." They cannot be compensated entirely for being uprooted, whatever is done for them. In common justice, it is necessary to give them more than exactly the same as if they were moving of their own accord to another place.
These things are difficult, and I do not see how they can be put precisely into Acts of Parliament. The Liverpool Corporation has already shown that it has experience of these matters at Burnaby, but it is only right that if the Bill, as I hope it does, goes through to a Select Committee, that Committee, having heard the views expressed in full House, should make it absolutely plain that, if a Measure is passed, real generosity is expected to be shown to this handful of people. The fact that they are only a handful makes them no less important. Real, proper, generous treatment should be given. I am sure that if such a lead were given, the Liverpool Corporation, like any great corporation, would he inclined to do more than justice.
A new source of water for the Liverpool Corporation area is essential for the near future. I believe that whatever criticisms may be made against it, this scheme is the only practical scheme that has yet been put forward. I believe that it can be brought into operation, if generosity and understanding is shown, without undue hardship. There are many technical matters and matters of detail to be decided, but I suggest that the Bill should be given a Second Reading and that those things should be decided by a Select Committee of the House.

8.13 p.m.

The Reverend Llywelyn Williams: No one could possibly complain of the tone of the speech of the hon. Member for Garston (Sir V. Raikes). I applaud the hon. Member for putting his case sincerely and moderately. I am sure that every hon. Member who heard the two opening speeches in opposition to the Bill by my hon. Friend the Member for Merioneth (Mr. T. W. Jones) and my hon. Friend the Member for Caernarvon (Mr. G. Roberts) will have been moved by the passionate sincerity with which that opposition was expressed.
There are many ways of approaching the conflict of interest that so obviously is now occupying the attention of the House. Possibly not all of us will agree on the right and proper arguments to adduce in the debate. One point must he made. Indeed, it has been made already. It is that there is a remarkable unanimity in Wales. We are not without our failings as Welsh people, and one thing which has always characterised Welsh people as I have known them is that so rarely

can one find them agreeing on anything. But on this matter the House should take cognisance of the almost phenomenal unanimity in Wales. No doubt like many other hon. Members, I have been supplied with a list of the religious organisations, embracing all the denominations in Wales, the cultural bodies and bodies representing all facets of Welsh life, all of which are opposed to this Private Bill.
I represent a constituency in an anglicised part of Wales. I am proud to notice that two of the local authorities in the western valley of Monmouthshire, Abertillery Urban District Council—very far removed from Tryweryn — and Abercarn Urban District Council have joined with county councils, borough councils, urban district and rural district councils and parish councils in opposing the Bill.
Hon. Members on both sides of the House must look very carefully at this opposition. It must not be dismissed as a lot of Welsh sentiment. On too many occasions in the past there has been a tendency to ride roughshod over sentiment, and a tremendous amount of trouble has ensued. Whilst my approach to this matter would be on lines rather different from the approach of sentiment, nevertheless all of us would be well advised to take notice of the remarkable feeling in the Principality of Wales about this Private Bill.
The argument which appeals most to me is the argument that has to do with the new conception of planning in Britain. The great mistake in the past, more in the remote than in the near past, has been to be completely without any conception of planning in our industrial development. When I think of the way in which important industries in the country have been prodically and wastefully developed, I feel proud that after the war a new outlook on planning was made manifest in the country.
Surely, no hon. Member would deny that it has been very unwise planning to have over-centralised industrial units. The London area, the Midlands and Liverpool are examples. It is contrary to all enlightened sociological opinion to perpetuate this concentrated, intensified industrialisation. That is why I suggest to the hon. Member for Garston, who spoke about the future industrial and domestic requirements of Liverpool, that the time


may well have come when that type of industrial development should be curtailed or should not be allowed to continue any longer.

Mr. John Tilney: Would not the hon. Member agree that planning takes a long time, and would there not be much prodigality and waste while the waters of the Dee flowed unused into the estuary?

The Rev. LI. Williams: I would remind the hon. Member also that this scheme will take ten years at the very least and there is no reason why we should not be thinking seriously now of the industrial under-development in the area affected by the Tryweryn scheme.
I am very concerned about North-West Wales. It is one of the social tragedies of our times that that area, which I know so well, has been denuded increasingly every year by the migration of its people from that type of community to the industrial centres in the Midlands, Liverpool, and elsewhere. I want to redress that grievance. I want to lend my support to any effort which will mean the bringing of industry to that area. Beyond dispute, that area has one economic asset and that is water. [An HON. MEMBER: "The only one"] The slate industry is a declining industry and I believe that in future water will be increasingly important in the industrial scene. That is why I think the Liverpool case, put quite moderately by the hon. Member, has been in the Bill exaggerated out of all proportion, and not sufficient attention has been paid to the claim of North-West Wales for some place in the industrial sun—if I may use that rather strange expression.
I shall speak bluntly, as my hon. Friends have done. I was very hurt by the way in which the Minister for Welsh Affairs acted towards the committee which the Government set up. That committee has, in a very real sense, been operating in a vacuum during the last few months, knowing all the time that all its recommendations would prove fruitless in view of the ambitious scheme which the Liverpool Corporation was determined to bring before the House. In some way the Government could have advised the Liverpool Corporation Bill sponsors to have awaited the recommendations of

that committee. I am sure that Wales feels as strongly as I do.
I do not want to speak at length since no one can add to the effectiveness of the case already put by my hon. Friends, but I wanted to assure the House that, whilst they have a more direct personal interest in opposing this scheme, I, representing an industrial area in the South, claiming at least to know the various aspects of Welsh life, feel that I should, and must, join my support with them in opposing the Bill. Obviously the only way in which we can really get down to the question of conservation and distribution of water is to have a national grid. Water is a national asset. That is why I think this harsh intervention of a big municipal authority such as the Liverpool Corporation will not help in that important job which awaits us in the future.
I am proud to think that my party is firmly committed to that policy. I know that hon. Gentlemen on the other side of the House who may not like the word "nationalisation" very much, at least feel that a strong argument can be made for a national grid for the supply of water in this country. I put it to both sides of the House that in a clash between the nation and a city, in a clash between the interests of a conurbation which has developed too much already, with an area which has been under-developed, surely the good sense and the enlightened opinion of th House should be with us who oppose this Measure.

8.24 p.m.

Mr. John Tilney: I was much interested in the remarks of the hon. Gentleman the Member for Abertillery (The Rev. LI. Williams), for whom I have had a high regard for many a year. He referred to water being a national asset. I cannot follow his argument when he recommends that this water should run to waste and that nothing should be done for its conservation for many a month and. possibly, many a year.

The Rev. LI. Williams: I ask the hon. Gentleman at least to get what I said in true focus. I was not suggesting that this valuable asset should run to waste what I was suggesting was that it should be used to help an area which really needs to use that water for the attraction of new industries.

Mr. Tilney: I see no reason why that should not be so. The hon. Gentleman also said that this reservoir would take ten years to build, but if we do not start building it now, it will take twelve or fourteen years, and in the meantime the water will run unused to the sea.
No country in the world has been more wasteful of water than Great Britain has been in the past. When I go to Africa and Asia, and see how little water they have, it makes me wild to realise how good Providence has been to this island and how little action man has taken to conserve the gifts of God to us. Here whenever one wants to use water in one's garden or on one's motor car, there is usually some order that it must not be used. In my view it is entirely our own fault that we have not taken sufficient action in the past.
There is one other thing I want to say to the hon. Gentleman. I understand that the Liverpool Corporation is prepared to let the Counties of Merioneth and Denbigh have what water they want once it is conserved—

Several Hon. Members: rose—

Mr. Tilney: I do not want to be cross-questioned on that. I am not a city councillor, but I understand that the Liverpool Corporation is prepared to help those two counties.

Mr. G. Roberts: It is not in the Bill.

Mr. Tilney: I think it is of great importance that this should be put into the Bill once it has been given a Second Reading and is being considered upstairs. I was sorry that I was unable to hear the whole of the speech of the hon. Member for Merioneth (Mr. T. W. Jones), but I heard what was said by the hon. Member for Caernarvon (Mr. G. Roberts). He referred to the water required for the development of Wales, as did the hon. Member for Abertillery. By this enterprise, Liverpool, admittedly, is virtually doubling the supply of water. The consumption of water in the Liverpool area is 50 gallons a head a day—not the 31 gallons mentioned by the hon. Member for Caernarvon. In the United States the consumption is 150 gallons per head per day.
If we are to progress, the consumption of water will increase tremendously year by year and unless we take action now,

water will be exceedingly scarce in the years to come. It is worth while noting that even in an extremely dry year the quantity of water which Liverpool will be authorised to take, namely, 65 million gallons per day, would run to waste into the estuary of the Dee. In a year of average rainfall twice the quantity required will run to waste and in wet years it will be anything between 195 million gallons and 260 million gallons per day.
Is it not time that we took action to conserve that water—very belated action? In my constituency of Waver-tree there are many Welsh people, many of Welsh descent and many Welsh speaking, and one is extremely sorry that with so many great links between my City and Wales this quarrel should have come into the open. I hope that some arrangements can be made in Committee to meet the very reasonable requests of the people of Wales. I cannot believe that the City Corporation of Liverpool will not do that. The Corporation has been generous in the past and I see no reason why it should not be generous in the future.
The opponents of the Bill have sent every hon. Member various photographs of the land which will be under water in future. I suspect that similar photographs could have been taken of almost any reservoir in the country. It is a question of the greatest good of the greatest number. There can be no doubt about that. In the ten years the scheme will take, the amenities will be protected by earth dams and there will be none of the ugliness of leats or great stone walls built across the lovely Welsh countryside. In that time there is a chance of saving water not only for Liverpool and Lancashire and the industrial development we want so badly, but for the people of Wales as well.
I have every sympathy with the view of the hon. Member for Abertillery that these conurbations have gone far too far and that it is time industry went into the country. If we get on with this scheme, there will be water for everyone. I urge hon. Members before they cast their votes tonight to look at the map and to see that there is virtually a God-given aqueduct in the River Dee coming out of the mountain fastnesses of Wales and to remember that the Dee and the Clwyd Rivers Board supports the scheme, as do the water associations of the whole country.

8.34 p.m.

Mr. Eirene White: I am very glad to have the opportunity of saying a few words in the debate, because I believe that I am the only Welsh Member who is at the receiving end of the Liverpool City water supply. Part of my constituency is entirely dependent on Liverpool for its water supply and in the past few years has been asking Liverpool to give it a very much more substantial supply than Liverpool has felt able to concede. So I have a very strong constituency interest in the scheme.
I know there are many farmers in the rural district of Maelor who are very anxious that the Bill should go through. However, there is nothing in the Bill, no definite statutory obligation, to make Liverpool Corporation do anything for that rural district once the Corporation has got the water. That is a defect in the Bill. I understand that the Birmingham Corporation, for example, entered into statutory obligations to serve certain other areas, but Liverpool has omitted to do so in this Bill. That makes my support of the Bill in this respect rather weaker than it might otherwise be.
It is also fair to say, as the hon. Member for Wavertree (Mr. Tilney) said, that since the earlier disagreement on the Bill, in very recent times the Clwyd and Dee River Board has approved the scheme in general terms. Again, there is a blemish, in that the Liverpool Corporation, having gone a fair distance to meet the River Board in other respects, for some reason or other is being extraordinarily difficult over the relatively small point of safeguarding the fishing interests. I should have thought that it was in Liverpool Corporation's interest to meet the River Board on this minor point, having met it on a number of major ones.
Having given two very strong reasons for supporting the Bill I am proposing to vote against it tonight. I propose to do so not because I oppose the scheme as such; frankly. I am not competent to judge upon its technical merits. My reason is that I believe that many hon. Members are put in great difficulty when Private Bills are considered here, because we have nothing but ex parte statements. We have the two authorities, each naturally and very properly wishing to stand up for its own interests, and we

get each one obviously putting the case as strongly as possible from its own point of view.
That is only one reason why I feel that this procedure is completely unsatisfactory. Many of those who may vote against the Bill tonight will be doing so not out of any antagonism—certainly not towards Liverpool—and not even necessarily because they think that the scheme is a bad one—indeed, in certain respects I believe it to be a very good one—but because they think that we cannot go on time and again having this Private Bill procedure, with one large corporation after another seeking powers to impound water, when we, as a Parliament and nation, refuse to deal with the problem of what we should do with our water supplies.
In support of what I have said I want to refer briefly to a most interesting article which appeared most opportunely in The Times on 24th June. The writer, who is an authority on the subject, pointed to the enormous increase in our national water consumption both absolutely and per head. Since 1938 our consumption, nationally, has risen from 650 million gallons to 905 million gallons, and although our storage capacity has increased by no less than 25 per cent. since 1945, nevertheless
we are rapidly approaching a period in which water will be a major factor in determining our standard of living and the location of industry.
The writer goes on to say:
with the present organisation of over 1.300 undertakings, the water industry is clearly going to need a gerat deal of guidance to meet this situation.
That guidance has not been forthcoming so far.
In spite of that, however, we in Wales have been given this Committee, which is to look into our position because we are one of the big supplying areas for the rest of the country. I cannot think that it would really hurt Liverpool interests so much if it continued its planning—there must be a great deal of preliminary work that it can still do in preparation—and said to the House. "We are willing to put a Clause in the Bill to postpone its coming into operation for a period of say, 12 months." That would give the Minister a chance of telling the Committee to concentrate upon North-West Wales—leaving the


southern part and possibly even mid-Wales for a later stage—and give those who want some objective information upon the matter a chance of obtaining a fair picture of the actual situation.

Mr. George Wigg: Is not my hon. Friend a little confused about the procedure with regard to Private Bills? Is she not confusing the fact that the Committee stage is not heard by a committee composed of Members arguing the merits of each Clause, but a committee before which expert opinion will appear, which can be cross-examined? Is not her point therefore wholly met?

Mrs. White: No, it certainly is not, because the terms of reference of any Select Committee do not require it to consider the total water resources—it can go into the merits of a particular scheme—or the methods that should be adopted. There are points of finance which, under the present state of our law, could not come within the purview of any committee which was set up.
Many of us feel that water is one of our great national assets from which we should derive full value, and we do not get that under the present procedure. That is not our fault. It is because of the present arrangements whereby all the water undertakings operate. But many of us believe that to go on rateable value—which is, in effect, what happens, and which, as my hon. Friends will know only too well, with equalisation grants means that a very much lower rate of benefit is obtained than might otherwise be the case—is not necessarily the right and proper way to work. It stands to reason that these great catchment areas are precisely those areas where we have sparse populations, with few natural resources and so on, and where there exists a great burden of maintaining social services, communications and the rest.
After all, water is no more God-given than other natural resources for which hard cash has to be paid. It is only right that the House should consider these matters before coming to a decision. Hon. Members may say that that is being hard on Liverpool. I think it is, and I have every sympathy with Liverpool. But if time and again this House simply passes one Bill after another on special pleading

from local authorities, knowing the inertia of Governments—I use the term Governments in its generic sense, I am not referring particularly to Conservative or Labour Governments—unless they are forced to face these problems, we shall go on postponing a decision year after year on the considerations which I have mentioned and which are put forward so clearly in the article in The Times.
Therefore, it is not out of any criticism of the Liverpool scheme—because I repeat that from my constituency point of view it has definite advantages—but because I think it our duty as legislators to make the country face this issue that I ask hon. Members to reject the Bill.

8.42 p.m.

Mr. Norman Pannell: I wish to apologise to the House for not being present during the earlier stages of this debate. In consequence, it is possible that some of the points I should like to stress have already been dealt with, but, even so, I consider them worthy of repetition.
I wholeheartedly support the Bill. I think it absolutely essential for the future and prosperity of Liverpool. All hon. Members who have read the circumstances of the case will agree with me. At the same time, I have certain misgivings with regard to it. I have a great affection for Wales and the Welsh people. Many thousands of them live in my constituency, and I reside within ten miles of the border of the Principality. I have spent many holidays in Wales and frequently make excursions into the country at weekends. I make a habit of putting a haversack on my back and walking round Lake Bala once a year. The physical exertion entailed is fully rewarded by glimpses of what I consider the most wonderful scenery in the United Kingdom. That, I think, will not be affected because of the safeguards which are given 
There is another problem regarding which I have great misgivings. I am not happy about the terms of compensation provided in the Bill for those who are to be dispossessed of their homes and property. This loss cannot be measured in terms of money. Some of these families have been there for generations, and, in my view, it is not sufficient to compensate them for the intrinsic value


of their property. It is said that money does not make happiness, but, at the same time, it makes misery much more endurable. It is in that spirit that the promoters of the Bill should consider the terms of compensation. In my view, those terms as they read are extremely harsh. They are weighted in favour of the Liverpool Corporation. I can understand that it is difficult to introduce into a Bill of this kind precise compensation terms of a more generous nature. Some effort should be made in that direction, because everything in the Bill is permissive. Even the power to rehouse is not obligatory.
It is stated that power is sought to acquire sites three and a half miles away where houses will be built to accommodate those who are dispossessed. There is no mention of the rents which will be paid. There are other matters which are left vague and indefinite. As a member for many years of the Liverpool Corporation I know it has treated these matters with great generosity. There is no reason to believe that it will not do so again, but that is not sufficient for the people who have been dispossessed. It should be possible to introduce into the Bill guarantees of a specific and generous character. This project will cost the Liverpool Corporation about £17 million. Surely the Corporation can make a gesture of generosity to people who are dispossessed of their traditional homes. If this should cost £20,000 it would be an insignificant sum compared to the total capital sum involved.
I recognise the difficulties of introducing a provision into the Bill in Committee, but I hope efforts will be made to do so. I believe that the Corporation is willing to consider such a course. For my part, and I think I speak for many hon. Members, my attitude towards later stages of the Bill will be conditioned by what happens in the Committee in this respect. I say that because in matters of this description the scales are weighted against the individual and in favour of the powerful Corporations.
I would stress one point that has been overlooked, and that is the definite benefit which the Bill will confer upon the Principality of Wales. Liverpool has for many years had water undertakings at Lake Vyrnwy and other parts of Wales, and in respect of those undertakings the

Corporation pays out no less than £208,000 a year in rates to outside authorities. Of that sum, £45,000 a year goes to Wales. The scheme which we are now considering is much greater in its scope. The total sum that the Corporation of Liverpool will have to pay per annum to outside authorities is estimated to be not less than £576,000 a year, of which £141,000 will go to the Principality of Wales and in particular to the area where this dam is being erected.

Mr. Arthur Moyle: Are not those costs the ordinary costs of any going concern, not paid by the Liverpool Corporation but by the people who use the water which the Corporation supplies?

Mr. Pannell: The scheme will create an asset which will be revenue-producing and which did not exist before. Part of the revenue derived from the asset will revert to Wales.

Mr. G. Roberts: I take it that the hon. Member for Liverpool, Kirkdale (Mr. N. Pannell) is referring to the extra rates that the source authorities may get from the construction of these rates. Is the hon. Gentleman aware that for every £1 the Chancellor of the Exchequer will take away £1 in equalisation grant?

Mr. Pannell: I am afraid I cannot say that. I do not know the circumstances in regard to equalisation grant, but I believe this matter is under reconsideration and that there may be a drastic revision of the provisions. All I can say on the merits of this case is that the Corporation will pay to the Principality £141,000 a year, the bulk of which would go to the County of Merionethshire. I should think there would be a very substantial sum for the development of that rather undeveloped area of Wales.
It should be stressed that Liverpool, which by its initiative is promoting this scheme, will incidentally bring great benefits to Wales. On the financial side, Wales will benefit to the extent of this very large sum annually.

Mr. J. Idwal Jones: Are those figures official?

Mr. Pannell: Those figures have been given me by the financial expert of the Corporation of Liverpool, in whom I repose the greatest confidence.

Mr. G. Roberts: Did the expert give the amount which will be paid in relation to the equalisation?

Mr. Pannell: As I have said, I am not competent to enter into that.

Mr. Idwal Jones: There has been a remarkable jump in the rateable value which it is suggested Liverpool Corporation will pay. When I asked a Question last December, it amounted to only £350,000. I am at a loss to see what has caused the tremendous rise in that figure.

Mr. Pannell: In this matter I am dependent on the expert opinion of the City Treasurer of the Corporation of Liverpool, who gave me this figure only yesterday. I personally have no reason to dispute it, but it is quite clear that, in introducing this scheme and promoting this project, Liverpool will be paying a very large sum to authorities outside the confines of the city. Whatever happens to the money, in the ultimate result Liverpool will pay, roughly, £140,000 a year as a result of this scheme. That should be stressed because there is a tendency to regard the scheme as detrimental to the interests of Wales and beneficial only to the City of Liverpool.
I had not intended to make more than those few short points. I hope that hon. Members will consider the Bill very carefully and will not be carried away by emotional considerations, but will recognise the vital necessity of the Bill to the City of Liverpool and to the future and prosperity of hundreds of thousands of people. I hope that they will cast aside their prejudices, examine the problem and regard it from a logical and reasonable point of view, and will give the Bill a Second Reading.

8.54 p.m.

Mr. Clement Davies: In the last seventy years Liverpool has drawn most of its water from the north of my County of Montgomeryshire under an Act of Parliament—passed, I think, in 1880—which enabled it at that time to block a valley. As a result some five miles of valley is under water. There is undoubtedly a very beautiful lake of about eleven miles circumference and water from it supplies Liverpool at present.
I should like to join with the hon. Member for Kirkdale (Mr. N. Pannell) in paying tribute to Liverpool, and

especially to Liverpool Corporation and its leaders, for their courage, foresight and determination and also their generosity. They undoubtedly have done their very best not only to maintain the amenities of that valley but to add to them, until undoubtedly today it is one of our beauty spots.
I do not remember the actual removal of the people from the valley, nor even the flooding of the valley, although I well remember that the people had to leave their homes which they cherished. New cottages were built for them, which were probably far better than anything they had previously occupied. I well remember the tragedy which was caused in that part of the world by that Act. The things which the people cherished were under water. The graves of their ancestors, the old church in which they worshipped and the chapels which they had built were under water.
Without going into the question of pure finance and the effect of the equalisation grant, I should like to add that, as a result of putting in the reservoir and the pumping stations and everything that is needed to remove the water from Lake Vyrnwy to Liverpool, the rateable value of that rural district was greatly increased. so much so that nearly half the rateable value of the county, which is very low, is within the rural district where that lake is.
It is significant that the memories of what happened still remain. The rural district council met and discussed this matter, and it had before it all that Liverpool had to urge. Let us remember that they know the generosity of Liverpool, but almost unanimously the rural district council voted against this proposal, so that the people of Merioneth would not have to suffer with the people of Montgomery.
Those are the views of people who have passed through this experience. Therefore, it is not merely a question of finance; there is the far bigger one—the human question. Without doubt, as pointed out by my colleagues from Wales, the human sympathy of Wales has been touched throughout north, south, east and west, and it is not confined to Wales. Opposition has extended to wherever Welsh people are to be found, and they are hoping that the Bill will not be given a Second Reading.
It has been suggested that this plan which Liverpool is now submitting will probably fit in with a greater one—a national plan. Will it, of necessity? This, of necessity, is a Liverpool plan. This, of necessity, is one which suits Liverpool, and it might very well happen that, when all the circumstances and the needs of the people everywhere are considered, this would not be the site that would be chosen. Yet, if this is done, then obviously we shall be unable to undo it; we shall have to accept it as such and do the best we can. This is obvious even in my county for the North is supplying Liverpool with water, as just over the border, Radnor-shire in the South is supplying the City of Birmingham with water.
Who is to know what will happen to the shifting population of the future—not the very distant future but the fairly near future? Development plans are now being considered in connection with a new energy which is to be developed, a new energy, as I understand it, largely dependent on the supply of water. We shall have to choose, and what will happen about the trend of population? The trend during the last 150 years, because of the situation of power which was to be found where the coal was, has been either to South Wales, to Glamorgan, Monmouth and Carmarthen or to the North, like the constituency of the hon. Lady the Member for Flint, East (Mrs. White), into Flintshire and Denbighshire.
Populations, however, are not static. Who could have foretold 150 years ago what would happen? Certainly we cannot foretell, so quickly have things moved in the first half of this century, what will be the position at the end of the century. Therefore, certainly for the last quarter of a century, being familiar with the position of Liverpool and what had happened in my own constituency, and, as I have said, full of praise for the courage and foresight of the Corporation and leaders of Liverpool at that time, I felt that they were, naturally, in the state of things as they were then, thinking only of themselves and not of anybody else.
For example, there is a town separated from Liverpool only by the Mersey. The two towns are very dependent upon one another, but in putting forward to the House of Commons the scheme which

produced water for Liverpool from Lake Vyrnwy, Liverpool considered only itself. It did not consider what would be happening to its close neighbour Birkenhead, who had then to see whether it could find some other Welsh valley which it could block—and, indeed, it did.
Obviously, what is needed is what has already been brought into being—a national survey. Then we may know exactly what are our sources of supply and we can do the best we can, with the human limitation that we have to see how best they can be linked together.
At the same time, I ask the House to bear in mind that mere financial considerations are not all. There are the deep human problems. I am not pressing the national point of view of Wales and everything in Wales for the Welsh people. We are partners together in this great island, where our people work together. But I would ask the House not to do what has so often been done by using the power of the majority to dominate over the minority, who also have their feelings and their position.
There is only one other thing to which I would call attention. There is a pressing need in my county. We are a poor county. We are purely agricultural. We have never been able to develop any industry outside agriculture. Time and time again, however, we consider what we can do to bring water to every little village community and to every farm.
My county council has on more than one occasion been on deputations which have consulted members of the Government about what might be done. All the time, whatever scheme the county has in mind, it must be realised that on the north of the county and on the south we are precluded from doing anything by two Acts of Parliament, one which gave special rights to Liverpool and one which gave special rights to Birmingham. The result is that in anything we do we are hampered by what has already been decided by this House and by the other place—by Parliament in general.
In the meantime, as I have so often pointed out, we are suffering from the exodus of our young people. They go to Liverpool and to Manchester and to Birmingham. We are an agricultural county, on which Liverpool has depended for its health and prosperity, yet our


population has steadily gone down year by year. Is that in order merely that Liverpool might prosper? Are we not entitled also to ask this House to take the more general view about what is best for the whole population?
One hon. Member spoke of the greatest good for the greatest number. That may be. If, by the greatest number, he means the nation as a whole, I would agree, but if he merely means that in Liverpool there is a population greater than there is in this little valley of Tryweryn that is a different matter. I sympathise with Liverpool in its need, but we should abandon the doctrine of first come, first served. We should look at the needs of the population as a whole, and Liverpool will lose nothing by waiting until we get that done.

Mr. Jack Jones: Before the right hon. and learned Gentleman sits down, may I, as one who fishes at Capel Celyn—which we call "Catch 'em and Kill 'em"—ask him if he could tell the House anything about a rumour that the Atomic Energy Authority has been looking at this area from the point of view of the production of atomic energy?

Mr. Davies: All I can say is that I myself have seen the Authority. I know that it is considering—and I cannot go further than this—what is the most suitable site, and I do know that its greatest need in that regard is for a sufficient quantity of water. I could not possibly go further than that.

9.6 p.m.

The Minister of Housing and Local Government and Minister for Welsh Affairs (Mr. Henry Brooke): I speak tonight with a conjunction of responsibility, first and foremost as Minister for Welsh Affairs and also as Minister of Housing and Local Government—that being the Minister on whom this House has placed responsibility to promote the conservation and proper use of water resources both in England and Wales.
I think that I should tell the House, because I want to put before it all the Information that is available to me, that, in my capacity as Minister for Welsh Affairs, I have received rather more than 600 protests against this Bill—680 to be exact. I have received 95 from local authorities, 210 from church, trade union,

political and other voluntary organisations of one kind and another, and 375 from private people. I have read everything that I have been able to see written in the Press by both sides about the Bill and about Tryweryn. I have visited Tryweryn and Capel Celyn, and I have met members of, I think, nearly all the families likely to be affected if this Bill goes through.
The hon. Lady the Member for Flint, East (Mrs. White) said that the Parliamentary procedure was unsatisfactory in that the House could not get all the guidance it required. I shall not go into technicalities tonight, because those are obviously a matter for the Committee. The Parliamentary procedure enables technical matters to be thrashed out in Committee. But I think that it is also customary that the responsible Minister speaks on Second Reading, and I shall try to discharge my responsibilities as well as I can in that respect.
The Liverpool plan is to impound water in the Tryweryn Valley which, at present, is flowing down the Dee through Wales, into England, back into Wales and out into the estuary—water that is now flowing to waste. The scheme is that by the use of this reservoir, it will be possible to secure a steadier flow of water down the Dee, releasing water when the river is low and holding it back when the river is in flood. It is no doubt because the Dee is severely troubled by flooding and that there is a great variation in the seasonal flow, that the Dee and Clwyd River Board, as the hon. Lady said, supports the Bill as a whole, though it has criticisms of it in detail.
Liverpool's plan is, further, to extract water from the Dee lower down, at a point where it is flowing through England. I am advised that the only reasonable way of using the water that is coming off the mountains around the Tryweryn Valley is to take it down the Dee Valley. It is almost inconceivable that it would be reasonable, by tunnelling and pumping, to take it through the mountains somewhere, whether down to South Wales or to North-West Wales into Gwynedd, where new industry is so much needed.
It is wholly right that the House of Commons, when considering a Measure like this, should pay full regard to the strength of Welsh feeling. There are misunderstandings among many people on


both sides in the matter—misunderstandings about the technicalities of this scheme. But, apart from that, there is deep, widespread and genuine feeling in many parts of Wales that Liverpool's action is aggression that must be resisted. It is my duty, as Minister, to submit a report to a Committee of either House, and in the Report which I submitted on this Bill to the Select Committee in another place, I used these words:
There is the disquiet and depth of feeling amongst many Welsh people that the proposal of the Liverpool Corporation constitutes an English intrusion, which they ought to resist, upon Welsh nationhood and cultural life and aspirations.
With the permission of the House, I should like to develop that for a moment. I speak with all modesty, not being Welsh myself, but, as I see it, Wales has its own language, its own traditions and its own history, and these together form a distinctive, but almost indefinable, Welsh way of life. Particularly in the Welsh-speaking parts of the country, such as that round Tryweryn, there is a deep-down sense of belonging to a rather special community. In philosophic terms, the values of the Welsh people, and particularly those who live in Welsh-speaking Wales, are not quite the same as in England or anywhere else, and why should they be? There is more quality in variety than there is in uniformity.
For many years, the distinctive nationhood of the Welsh nation has been felt to be under threat of eventual disappearance through absorption into all the rest of British life. This follows historically from the Industrial Revolution and the power which industrial civilisation, as we all know, can exercise in making the whole world smaller. Every year, more and more tourists and holiday-makers are coming from England into Wales. More and more, the barriers which can preserve the old country way of life seem to be disappearing. More and more links are being forged between industry in Wales and industry in England and between the economic life of Wales and that of the rest of Britain, and if integration becomes complete, Wales as a separate nation may become forgotten and the Welsh language may die out.
It is from causes like this that very great numbers of Welsh people feel that it is specially important to preserve the

difference between Wales and England which does survive. That is how they come to be opposed to any semblance of pressure, even if it is quite unconscious pressure, to absorb Wales into the English way of life.
At the ultimate end, the opposition which has manifested itself in Wales to the Liverpool scheme is not based on simple issues like balancing the hardship caused to 60 people by having their homes flooded and needing to move some miles down the valley, against the increased rateable value, the increased employment and the improvement in water supplies on the way down the Dee. It is far deeper than that. It is opposition by people who feel that perhaps the critical point is being reached in the fight to keep Wales different from England, and that it is vital, on Tryweryn, to make a stand.
I have called attention as well as I may in my Report to all this. I have called attention to the displacement of population that would follow in Capel Celyn.
Here I want to pause for one moment because the right hon. Gentleman and others have spoken movingly about the shift of population. I am bound to tell the House that there was no similar protest that I can trace when the North Wales Hydro-Electric Power Act went through Parliament a few years ago. That Act authorised work that was liable to displace a considerably greater number of people than would be affected at Capel Celyn.
There was nothing like the same protest from Wales on that account, which confirms me in the view that the protest is motivated in large part by the feeling that this is action to the benefit of England rather than Wales; that that is the motive rather than absolute resentment that a reservoir should be built where people's homes may be submerged.

Mr. G. Roberts: Can the right hon. Gentleman tell the House whether any of the people concerned in the hydroelectric scheme objected to being moved?

Mr. Brooke: Yes, there certainly was objection. There certainly was a defence committee. It was before my time—

Mr. T. W. Jones: I represent that area. There was no objection whatever. The local council held a public meeting and


there was unanimous support for this scheme. I must point out that it did not involve a chapel or cemetery, but at the utmost half a dozen houses.

Mr. Brooke: I must tell the House that the powers which were granted by that Act certainly authorised the submerging of all that I said.

Mr. Roderic Bowen: rose—

Mr. Brooke: I really ought not to give way because I want to allow time for hon. Members to wind up the debate.
I turn to Liverpool's water situation. I summarised that in my report to that Select Committee in this way, that Liverpool Corporation
have a real and urgent need to augment their water resources if they are to fulfil their duty of providing adequate supplies to their domestic and industrial consumers and to meet the needs of adjoining areas which are dependent upon supplies provided by them.
However long one examines the water situation, and however many additional bodies are set up, whatever organisation we create, it will remain true that North Wales is the most obvious and the cheapest source of water supply for Liverpool. The other possible alternatives in the Peak District and the Pennines are already fully committed, and it would be very substantially more expensive for Liverpool to obtain water from the Lake District than from North Wales. Indeed, in a wholly rational world, forgetting national or county boundaries, there is little doubt that it would be water from the area which we are discussing which would be regarded as the most suitable to meet Liverpool's needs. Liverpool did, in fact, investigate six other areas in North Wales and rejected them in favour of Tryweryn. All those six areas remain; they are capable of being dammed and of providing further water supplies for Welsh or English requirements.
Reference has been made to the financial effect on the local authorities. Obviously, there would be a considerable increase in the rateable value of Merioneth and of the other counties, Montgomery, Flint and Denbigh. I certainly confirm that that would be offset, in whole or nearly in whole, by loss of equalisation grant. I find it somewhat difficult to square the stress laid by hon. Members from Welsh constituencies on

the desire for Wales to stand on her own feet with the apparent lack of reluctance that local authorities should make good their rateable value through the equalisation grant scheme rather than through improving their own rateable values in their own areas.
I must refer to the effect on future industries in the valley, from Tryweryn right down to the Dee, because as Minister for Welsh Affairs I regard this as one of the most important aspects of the matter. There is no question that employment has been falling away over the decades in North Wales, and it would be wholly wrong to take some action that would lessen the chance of establishing industry where industry is needed. To the best of my judgment, and I have taken what advice I can, it would be almost out of the question for large-scale industry to come to that area. It could not do so without polluting the Dee, which is providing drinking water for three-quarters of a million people down its course, apart from its value as a fishing river.
In my judgment, no action that is proposed to be taken by Liverpool here could reduce the chance of the Dee Valley attracting industry. On the contrary. There would be a more steady flow of water down the Dee, and I understand that the Liverpool Corporation has given an undertaking to supply up to 5 million gallons a day to authorities or industries down the river which would need it—and 5 million gallons is sufficient to supply the needs of a good-sized county borough. All these considerations lead me to think that, if anything, the prospect of industrial development in the valley would be increased rather than decreased by the change.

Mr. James Griffiths: Will the right hon. Gentleman say something about the matter raised by my hon. Friend the Member for Rotherham (Mr. Jack Jones) and by the right hon. and learned Member for Montgomery (Mr. C. Davies) on the possibility of atomic energy plant being established there? What would be the daily supply of water needed for an industry of that kind?

Mr. Brooke: Yes, I should like to speak about that. The new projects which might come to Wales are not only atomic power stations but chemical processing,


oil refining and the like. All industries of that kind, including atomic power stations, are almost certain to go to the coast or to an estuary, because of the enormous quantities of water which they require. I cannot think that it is conceivable, at any rate in the present state of knowledge, that any part of this valley would be chosen as a site for an atomic power station in preference to a site on the coast or on an estuary.

Mr. S. O. Davies (Merthyr Tydvil): This is of vital importance to the whole issue. Is the right hon. Gentleman not aware that if this valley were dammed, the water could be taken from the valley to supply any atomic energy station to the west or south-west of it or on the coast? Would he consider the ordnance map before he commits himself absolutely to support the very weak case of Liverpool as he is now trying to do?

Mr. Brooke: I have given my best attention to the matter and I have consulted water engineers. The best advice that I can get from them is that it would be quite unreasonable to try to get water out of this valley in any other direction than down the Dee, because of the colossal expense. And on the other side of the mountains there are ample water supplies, because the rainfall is heavy.
I was asked about the water survey. There is no water committee, as one or two hon. Members said. I am hoping that there will be an advisory committee on Welsh water supplies when the technical survey is completed. At the moment we are pressing on with that survey. It is clear to me, from all the knowledge that was available even before we started it, that the Tryweryn Valley is an area of great water surplus, and not of shortage. I set the survey on foot largely because I was looking years ahead, and I did not want a situation to arise, in South Wales or anywhere else, where industry might grow and where there would be found to be a lack of water in an area. One must look decades ahead in water matters.
That was the reason why I initiated this survey, and I believe it will be of great value. At present there is no lack of water in Wales generally, and in this area there is a great exportable surplus.

I considered very carefully and sympathetically the plea made by the hon. Lady the Member for Flint, East and others, that the sensible thing to do would be to postpone action by Liverpool for two years until the result of the survey was available. [HON. MEMBERS: "Hear, hear."] I am advised that to do this would be to take a grave risk for little result, because there can be no question that any survey by any water expert, Welsh or English, will reveal other than a very large exportable surplus in that area.
It was the Chairman of the Dee and Clwyd River Board who said the other day that of the total rainfall on Wales only about 2 per cent. was now piped away to England. So that Wales has a vast exportable surplus of water, over and above all her foreseeable needs, which is at present running to waste.
There was an interesting paper which Dr. Buchan of the Geological Survey—here I am quoting a Scotsman and not an Englishman—read to the River Boards Association not long ago. In it he pointed out that the average rainfall per head of population which is available for use, after allowing for evaporation, is in England 662 gallons per head per day and in Wales 3,802 gallons per head per day—more than five times as much. That is the reason why Wales has a colossal water surplus.
Looking as far ahead as I can and taking into account all that surveys or committees may reveal, and all the possibilities of national grids and any other likelihood, the needs of the City of Liverpool can reasonably be met from the Tryweryn Valley, with no economic loss whatever to Wales but some potential economic gain.
I have to advise the House, taking account of all my responsibilities, which I have listed. There was a recent debate in the House on water in which special emphasis was put on my responsibility to protect the conservation and the proper use of water resources in England and Wales. I accept that responsibility. Liverpool has brought forward a plan. It has been through nine days of detailed examination in Committee in another place, and has been unanimously reported on favourably by that Committee. That does not prove that it does not require


further technical examination by a Committee of this House, but what I have said should cause hon. Members to pause before, in advance of technical examination, they reach any conclusion that on technical grounds there is not a strong case for the Bill.

Major H. Legge-Bourke: My right hon. Friend has said that he thinks that there is a case for a technical examination by a Committee of the House. It is possible that I may be Chairman of that Committee, if the Bill gets a Second Reading. It is important to realise that no Committee of this House is qualified to deal with the matter. We may get the case put to us by counsel and have technical evidence called before us, but this House cannot provide a Committee which can judge technically.

Mr. Brooke: I thought it was understood, when one spoke of technical examination, that our admirable Parliamentary system is that the technical experts appear before the amateurs, and I hope that we shall always do it that way.
As the Minister responsible for water conservation and use, I am bound to advise the House that Liverpool has a case which merits the most serious consideration in Committee. If the House were to reject the Second Reading without subjecting the Bill to examination in Committee, hon. Members who had voted for the Bill's rejection would saddle themselves with a very grave responsibility for water shortages which might occur in the next few years on Merseyside and in south-west Lancashire. I cannot believe that preservation of the Welsh way of life requires us to go as far as that. I cannot believe that the Welsh people of all people want to stand outside the brotherhood of man to that extent.

9.32 p.m.

Mr. Tudor Watkins: The right hon. Gentleman should at once take steps to delete the words "Minister for Welsh Affairs" from his title. I am privileged to wind up for the side which has moved the Amendment because I live in one of the counties which is a great exporter of water.
In Breconshire, we supply water to fourteen separate local authorities outside

the county. We are proud of that, and we have been able to make very good arrangements for it. The promoters of the Newport Corporation Bill did not meet a local requirement, and the Bill was therefore rejected by the Select Committee which examined it. If this Bill receives a Second Reading, it is possible that the Select Committee which examines it will come to a conclusion similar to that of the Select Committee which considered the Newport Corporation Bill.
The Minister set up an advisory committee because of the activities of Liverpool Corporation. Although he set up the committee, he does not know how far its work has proceeded. I am certain that if the Minister asked for it the committee could provide him with an interim report, and I am sure that Liverpool Corporation would accept an Amendment to allow that to he done.

Mr. H. Brooke: There is no possibility whatever of getting a report from this survey—it is not a committee—in time for Liverpool to introduce the Bill again in the next Session of Parliament.

Mr. Watkins: I am tempted to reply that if the American nation wanted a camp in Breconshire they would do it in a month.
I want to refer to what was said in another place. Lord Moyne there said that it was illogical to have an inquiry after and not before the Bill, and there is some substance in that statement. If the largest catchment area remaining in Wales is outside the survey it will make that survey a farce. There will be no point in making it. Surely the Minister can ask for a survey to find the Welsh mountain valleys which are suitable for reservoirs; the hills which are suitable for afforestation, and the places in the lowlands which might be utilised for agriculture. I am certain that as a result of such a survey, and with the good will of the Welsh people, those requiring water would be able to get it from Wales.
I am glad that hon. Members on both sides have spoken in favour of a national grid, and I hope that the Minister will take note of what has been said about that. I am sorry that I cannot say anymore about an advisory committee, because my time is limited, but I want the promoters to put a better case to the House of Commons than has been put so far.
The best thing I can say about the report of the Minister of Housing and Local Government to the Select Committee is that it is a recapitulation of the case for the Bill. That is what is said of him as Minister of Housing and Local Government. Did he have any regard to his position as Minister for Welsh Affairs? Does he remember going to the little valley of Tryweryn, where a little girl presented him with a bunch of primroses and the newspapers the following day said that he had earned a friendly kiss? I will not say anything more about it, except that the kiss which the little girl gave him will mean something else to her if the Bill receives a Second Reading tonight.
There were 680 protests; I am grateful to the Minister for giving us the correct number. As Minister for Welsh Affairs he is the voice of Wales in the Cabinet. He gave us a very good survey of Welsh life. If he had given it in Welsh it would have been a very good initiation for him as a bard at the National Eisteddfod. I would remind him that there are reports upon Welsh affairs. Table 8 of the Report on the Second Memorandum of the Council for Wales deals with the percentage of piped water supplies in Wales in rural districts, for each county.
If Liverpool gets all the water it wants what will happen in Merioneth, where only 61 per cent of the rural districts have a water supply; in Caernarvon where the figure is 70 per cent.; Breconshire, with 77 per cent.; Radnorshire, with 54 per cent., and Montgomeryshire with 26 per cent? The average for Wales as a whole is 72 per cent., which means that nine of the counties for which the Minister is responsible have a piped supply below that average. He should have had regard to that fact when he submitted the Report to the Select Committee about the requirements of these Welsh counties.
He should be aware that according to the 1951 Census Report on Merioneth, Montgomery and Radnor 44 per cent. of the households are without the exclusive use of a piped water supply. The average for England and Wales is 17 per cent. He has a responsibility for finding some means of providing piped water supplies for those three counties. If he thinks that Liverpool have been so generous, I would ask him to consider the 1951

Census. If he does so he will find that in the Llanfyllyn Rural District Council 65 per cent. of the households are without a piped water supply.

Mr. Brooke: That is the responsibility of the local authorities concerned. There is plenty of water; the trouble is that much too much is being allowed to run to waste.

Mr. Watkins: May I take it from what the Minister has said that the credit squeeze on these small rural water supplies is lifted from now?

Mr. Brooke: There is a great deal of water enterprise going on and I want to see it go faster. I am disappointed that some Welsh local authorities do not seem to me to take their responsibilities in this matter as seriously as I do.

Mr. Watkins: I am sure that all Welsh local authorities will be able to frame a grave indictment against the Minister tomorrow morning. I hope they will. I did not wish to use political arguments in this connection, I have tried to avoid them, but I am bound to do so because of the utterances of the Minister himself.
I wish to say to my hon. Friend the Member for Liverpool, Exchange (Mrs. Braddock)—it appears in page 7 of the evidence given to the Select Committee—that no statutory obligation is in the Bill to give a gallon of water to the Welsh counties or to any Welsh interests. The hon. Member for Wavertree (Mr. Tilney) tried to give an undertaking about putting in a Clause to this effect. Why has not that been done already? Can I obtain an undertaking from my hon. Friend the Member for the Exchange Division that a Clause will be inserted?
The Minister told the Select Committee that South Wales was too remote to get water supplies from the Tryweryn Valley. That may be true today, but what will happen in twenty years' time. Is Tryweryn further away from South Wales than the Lake District is from Manchester? I think that the Minister will find that Manchester is further away from the Lake District than South Wales is from Tryweryn. Yet the Minister actually stated that; but I am sure that, after he has been to the beautiful Welsh valleys, he will realise that he was wrongly advised. One witness from Liverpool who appeared before the Select Committee


said that there could be an undertaking hut that there would be strings attached to it. We do not want any trade union practices here—

Mr. Sydney Silverman: If my hon. Friend the Member for Liverpool, Exchange (Mrs. Braddock) gives the undertaking for which my hon. Friend the Member for Brecon and Radnor (Mr. Watkins) is asking, will he then vote in favour of a Second Reading for this Bill?

Mr. Watkins: I am sorry, but that is only one of the indictments which have been made in this debate.
The water supply of this country should not be monopolised by any water undertaking or by any authority, and I am surprised that in 1957 a local authority should promote a Private Bill to do such a thing. Let me remind the Minister that each time local authorities try to promote Private Bills to add to the area within their boundaries for housing purposes, they are told that it is a national problem. Would it not have been better if the Minister, who is responsible for Welsh affairs, had told the Liverpool Corporation that this was a national problem?
I protest at the way in which my constituents may have to go without water because other places are getting it. I hope that the nation will raise its voice in favour of doing something on a national scale. We must do away with the Select Committee procedure. If this be a national problem I am sure that my hon. Friend the Member for Nelson and Colne (Mr. S. Silverman) will vote for the Welsh people. He cannot disagree with me when I say that this is a national problem and not a problem for the Liverpool Corporation. I ask the House not to give a Second Reading to the Bill. Let us have the report from the advisory committee and then Liverpool can get its water.

9.45 p.m.

Mrs. E. M. Braddock: Having listened to the whole of the debate, I think I may say that the whole House is agreed that there should be a nationally controlled water scheme as soon as possible.
In the meantime, large local authorities like Liverpool with responsibilities not only to their citizens but to very many

other areas, have to deal with these matters according to their financial opportunities. Liverpool, after many years of devastating unemployment, has attracted to itself industries which have created almost full employment, and until such time as legislation preserving all the water in this country for use by all our people has been accepted in this House there must be some way of meeting the needs of large communities. When a national water scheme comes into operation the existence of water schemes financed by large municipal corporations may make its introduction much easier.
If the approval of the Bill is delayed or if the Second Reading is not agreed to, it will be at least three years before anything further can be done in this matter, but action is imperative in the interests not only of Liverpool but of many other areas. If I now refer to my brief it is because I expected that I should not have long to address this House, and I wanted to present all the salient facts.
Firstly, the need for the Bill arises not only in Liverpool but in the whole of North Merseyside, Chorley and twenty-four authorities, including some in Wales, on the line of the Rivington and Vyrnwy aqueducts. This is a regional and not a local scheme. At present, demands already exceed the yield of existing sources, and no new demand for water can be met. If the people to whom Liverpool Corporation has an obligation increase their demands and if Lancashire increases its industrial capacity and requires more water, Liverpool cannot meet the demand.
The scheme has passed through another place, and would meet the needs of everybody for at least forty years. That is an important point if we are to consider a nationalised water scheme. There will be benefits to the River Dee. The scheme, as worked out with the river board, will reduce floods in the Dee Valley and will increase the flow in times of little rainfall. It must be well known to those who have studied this matter that excellent agricultural land is sometimes completely flooded and becomes useless because there is no way of controlling the flow of the Dee waters. That agricultural land has a higher productivity than the land that will be submerged if the scheme of the Bill is accepted.
Essentially, this is a river conservancy scheme which will benefit the riparian owners and authorities both in England and Wales who are now authorised to take water from the Dee. Tryweryn reservoir will be operated under the direction of the river board, to the benefit of the river. As to the effect in the Tryweryn Valley, the scheme is designed to do as little damage as possible to homes and agriculture. The land to be flooded is not of high agricultural value.
I want to set at rest one or two anxieties which have been disturbing people about this scheme. In the first instance, Liverpool did not decide on the site for a scheme without consulting those living in the district. It picked out three important areas from where it might be possible to obtain water, the Lake District, Lancashire and more than one place in North Wales, and a personal letter was sent to every tenant in the area in which borings were to be taken.
That letter stated that Liverpool Corporation was doing some exploration with reference to water and did not want to do anything without the personal agreement of every individual in the area. A stamped addressed envelope was included with the letter. Some tenants replied and some did not. Rather than start a scheme in a place where tenants had not replied, Liverpool Corporation sent some of its staff to interview personally those who had not replied to the letter. Only in circumstances where agreement was reached that something might be looked at in the area was anything done at all.
Liverpool did not "walk in" without some sort of approach and did not do anything until it received the permission of the people in the area which was to be looked at, not only in the Tryweryn Valley but the other two places which were considered before Liverpool decided on the scheme which it thought would be the best. Then, and only then, when Liverpool had decided which in its opinion would be the most useful site—not only to itself but to those to whom it had to supply water, in addition to the use of the River Dee—was the approach made to the local authority. There was no need to approach a local authority if there was no question of doing anything in its area. After that, Merionethshire local authority was approached.
In fairness to Liverpool Corporation, I had to say that because many comments were made that it "walked into" those areas and did not consult anyone. There was nothing of the sort. Nothing was done that was not agreed to by the tenants in the area.
Some disturbance of the inhabitants is, of course, inevitable. Everyone deplores the fact that in the interests of progress sometimes some people must suffer, but that is progress. Liverpool Corporation has said that in every instance in which people will be displaced from their homes it will build new homes for them and, wherever possible, it will obtain for them —by powers it will be able to obtain— alternative agricultural land on which smallholders can continue their farming operations. I give that guarantee, which has been given by Liverpool Corporation.
We looked at many schemes, in the Lake District, Lancashire and North Wales, before this scheme was adopted. Local and other authorities were consulted, and no information was refused to them. The benefits of the scheme to the Dee and the area dependent on the corporation for water far outweighed the disturbance which will be caused to the valley. Rehousing people at a new site in the valley cannot destroy Welsh culture. Let us remember the happy atmosphere at Lake Vyrnwy and the amenities which Liverpool Corporation has given to people displaced in that area. One has only to visit the place and to talk to the people in the area to appreciate that. We would do exactly the same at Tryweryn. The Minister's report on water resources cannot affect the present urgent need for water and the fact that this is a good scheme for a wide area. The smaller reservoirs suggested by the county council are not practicable on economic grounds.
In addition, there has been some question about whether Liverpool Corporation would give a guarantee that people who require water, either for private use in houses or in industry, in the Merionethshire area would be allowed to take water from the reservoir. I want to give a very specific and detailed guarantee here and now. Because this was specific and detailed I want to read it exactly as stated by the promoters.
I admit that if the Bill goes through to Committee there are difficulties about


incorporating things of this sort in it. They are difficulties of legality. In order that there may be no ambiguity about it, I will read exactly what the Liverpool Corporation says. I am a member of the Corporation and I am speaking now as a representative of the Corporation and giving a guarantee that what I am saying will be acted upon if the Bill receives a Second Reading tonight. The guarantee is:
The Corporation are quite prepared when the works proposed in the Bill have been constructed to afford a metered supply in bulk from the reservoir either to local authorities or to industrial consumers or others in the Counties of Merioneth and Denbighshire provided that the local statutory undertaker in the area concerned is not in a position to supply those requirements and does not object to such supply being given and provided that the Dee and the Clwyd River Board whose control over the water in the reservoir will be paramount has no objection…
Someone exclaimed "Oh". It is the river board that is the responsible authority and would have to agree—
The Corporation will submit for consideration by the Committee to which the Bill may be referred provisions for insertion in the Bill to give statutory effect to this undertaking in such terms and subject to such conditions as the Committee may approve.

In giving that guarantee, the promoters will deal with it in that way through the Bill. This guarantee was given to the Merionethshire County Council when the Liverpool Water Committee met the County Council. It did not comment about it, but said that even though this guarantee were given it would still have to oppose the Bill. That is the position at the moment. Having given that guarantee and having said that Liverpool will go so far as possible in order to mitigate any difficulties and give every assistance possible, I hope that the Amendment will be withdrawn in order that the Bill may receive the necessary investigation.

The Deputy-Chairman of Ways and Means (Sir Gordon Touche): rose in his place, and claimed to move, That the Question be now put.

Question, That the Question be now put, put and agreed to.

Question put accordingly, That the words proposed to be left out stand part of the Question:—

The House divided: Ayes 166, Noes 117.

Division No. 161.]
AYES
[9.59 p.m.


Agnew, Sir Peter
Finlay, Graeme
Johnson, Eric (Blackley)


Allan, R. A. (Paddington, S.)
Fletcher-Cooke, C.
Johnson, James (Rugby)


Allen, Arthur (Bosworth)
Fort, R.
Jones, Jack (Rotherham)


Arbuthnot, John
Foster, John
Kaberry, D.


Armstrong, C. W.
Fraser, Sir Ian (M'ombe &amp; Lonsdale)
Kimball, M.


Ashton, H.
Fraser, Thomas (Hamilton)
King, Dr. H. M.


Bacon, Miss Alice
Galbraith, Hon. T. G. D.
Lawson, G. M.


Baldock, Lt.-Cmdr. J. M.
Gammans, Lady
Leavey, J. A.


Barber, Anthony
George, J. C. (Pollok)
Lee, Frederick (Newton)


Barter, John
Glover, D.
Lindgren, G. S.


Baxter, Sir Beverley
Godber, J. B.
Lindsay, Hon. James (Devon, N.)


Beamish, Maj. Tufton
Graham, Sir Fergus
Lindsay, Martin (Solihull)


Blackburn, F.
Green, A.
Lloyd, Maj. Sir Guy (Renfrew, E.)


Blyton, W. R.
Gresham Cooke, R.
Logan, D. G.


Boardman, H.
Gurden, Harold
McAdden, S. J.


Bowden, H. W (Leicester, S.W.)
Hamilton, W. W.
MacColl, J. E.


Boyd-Carpenter, Rt. Hon. J. A.
Hannan, W.
McKibbin, A. J.


Braddock, Mrs. Elizabeth
Harrison, A. B. C. (Maldon)
Macpherson, Niall (Dumfries)


Braine, B. R.
Harvey, Sir Arthur Vere (Macclesfd)
Maddan, Martin


Bromley-Davenport, Lt.-Col. W. H.
Harvey, John (Walthamstow, E.)
Mahon, Simon


Brooke, Rt. Hon. Henry
Heath, Rt. Hon. E. R. G.
Mann, Mrs. Jean


Brooman-White, R. C.
Hesketh, R. F.
Markham, Major Sir Frank


Brown, Thomas (Ince)
Hill, Mrs. E. (Wythenshawe)
Mathew, R.


Burke, W. A.
Hobson, C. R. (Keighley)
Maydon, Lt.-Comdr. S. L. C.


Butcher, Sir Herbert
Holmes, Horace
Mellish, R. J.


Cary, Sir Robert
Hornsby-Smith, Miss M. P.
Milligan, Rt. Hon. W. R.


Cooke, Robert
Horsbrugh, Rt. Hon. Dame Florence
Moody, A. S.


Craddock, Beresford (Spelthorne)
Hoy, J. H.
Morrison, Rt. Hn. Herbert (Lewis'm, S.)


Dance, J. C. G.
Hubbard, T. F.
Neave, Airey


Davidson, Viscountess
Hughes, Hector (Aberdeen, N.)
Oakshott, H. D.


Deer, G.
Hughes Hallett, Vice-Admiral J.
Orr-Ewing, Charles Ian (Hendon, N.)


Dodds-Parker, A. D.
Hughes-Young, M. H. C.
Page, R. G.


Donaldson, Cmdr. C. E. McA.
Hutchison, Sir Ian Clark (E'b'gh, W.)
Pannell, Charles (Leeds, W.)


Duthie, W. S.
Hynd, H. (Accrington)
Pannell, N. A. (Kirkdale)


Elliott, R.W. (N'castle upon Tyne, N.)
Iremonger, T. L.
Pargiter, G. A.


Emmet, Hon. Mrs. Evelyn
Irvine, A. J, (Edge Hill)
Pentland, N.


Errington, Sir Eric
Jennings, Sir Roland (Hallam)
Peyton, J. W. W.




Pitman, I. J.
Slater, J. (Sedgefield)
Turner, H. F. L.


Popplewell, E.
Smyth, Brig. Sir John (Norwood)
Wakefield, Edward (Derbyshire, W.)


Pott, H. P.
Sparks, J. A.
Wall, Major Patrick


Powell, J. Enoch
Spence, H. R. (Aberdeen, W.)
Ward, Rt. Hon. G. R. (Worcester)


Prentice, R. E.
Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)
Ward, Dame Irene (Tynemouth)


Price, David (Eastleigh)
Stanley, Capt. Hon. Richard
Waterhouse, Capt. Rt. Hon. C.


Price, Henry (Lewisham, W.)
Steele, T.
Wheeldon, W. E.


Price, J. T. (Westhoughton)
Steward, Harold (Stockport, S.)
White, Henry (Derbyshire, N.E.)


Proctor, W. T.
Steward, Sir William (Woolwich, W.)
Whitelaw, W. S. I.


Raikes, sir Victor
Stones, W. (Consett)
Wigg, George


Ramsden, J. E.
Studholme, Sir Henry
Wilcock, Group Capt. C. A. B.


Redmayne, M.
Summerskill, Rt. Hon. E.
Wills, G. (Bridgwater)


Rhodes, H.
Taylor, John (West Lothian)
Wilson, Rt. Hon. Harold (Huyton)


Ridsdale, J. E.
Taylor, William (Bradford, N.)
Winterbottom, Richard


Rodgers, John (Sevenoaks)
Temple, John M.
Woodburn, Rt. Hon. A.


Ross, William
Thompson, Kenneth (Walton)
Woof, R. E.


Schofield, Lt.-Col. W.
Thompson, Lt.-Cdr. R.(Croydon, S.)



Sharples, R. C.
Thornton, E.
TELLERS FOR THE AYES:


Silverman, Sydney (Nelson)
Tiley, A. (Bradford, W.)
Mr. Woollam and Mr. Kenyon.


Skeffington, A. M.
Tilney, John (Wavertree)





NOES


Allaun, Frank (Salford, E.)
Harrison, J. (Nottingham, N.)
Pearson, A.


Awbery, S. S.
Harrison, Col. J. H. (Eye)
Peart, T. F.


Bennett, F. M. (Torquay)
Hastings, S.
Probert, A. R.


Bishop, F. P.
Hayman, F. H.
Randall, H. E.


Body, R. F.
Hirst, Geoffrey
Rankin, John


Bowen, E. R. (Cardigan)
Holt, A. F.
Redhead, E. C.


Brookway, A. F.
Hughes, Cledwyn (Anglesey)
Roberts, Goronwy (Caernarvon)


Butler, Mrs. Joyce (Wood Green)
Hughes, Emrys (S. Ayrshire)
Robertson, Sir David


Callaghan, L. J.
Hunter, A. E.
Royle, C.


Champion, A. J.
Jeger, Mrs. Lena (Holbn &amp; St. Pncs, S.)
Scott-Miller, Cmdr. R.


Chetwynd, G. R.
Jenkins, Robert (Dulwich)
Short, E. W.


Collins, V. J. (Shoreditch &amp; Finsbury)
Jenkins, Roy (Stechford)
Silverman, Julius (Aston)


Craddock, George (Bradford, S.)
Jones, T. W. (Merioneth)
Simmons, C. J. (Brierley Hill)


Crosthwaite-Eyre, Col. O. E.
Kerby, Capt. H. B.
Smith, Ellis (Stoke, S.)


Crowder, Petre (Ruislip—Northwood)
Kirk, P. M.
Sorensen, R. W.


Daiton, Rt. Hon. H.
Lagden, G. W.
Soskice, Rt. Hon. Sir Frank


Davies. Rt. Hn. Clement (Montgomery)
Langford-Holt, J. A.
Speir, R. M.


Davies, Harold (Leek)
Linstead, Sir H. N.
Taylor, Bernard (Mansfield)


Davies, Stephen (Merthyr)
Mabon, Dr. J. Dickson
Teeling, W.


Delargy, H. J.
McInnes, J.
Thomas, George (Cardiff)


Donnelly, D. L.
Mackie, J. H. (Galloway)
Thomas, P. J. M. (Conway)


Ede, Rt. Hon. J. C.
MacLeod, John (Ross &amp; Cromarty)
Timmons, J.


Edelman, M.
MacMillan, M. K. (Western Isles)
Ungoed-Thomas, Sir Lynn


Eden, J. B. (Bournemouth, West)
Macmillan, Maurice (Halifax)
Usborne, H. C.


Evans, Albert (Islington, S.W.)
Mallalieu, E. L. (Brigg)
Viant, S. P.


Farey-Jones, F. W.
Marquand, Rt. Hon. H. A.
Vickers, Miss Joan


Fernyhough, E.
Mason, Roy
Wade, D. W.


Forman, J. C.
Mawby, R. L.
Wells, William (Walsall, N.)


Garner-Evans, E. H.
Monslow, W.
White, Mrs. Eirene (E. Flint)


Gibson, C. W.
Morris, Percy (Swansea, W.)
Wilkins, W. A.


Gibson-Watt, D.
Mort, D. L.
Williams, David (Neath)


Gomme-Duncan, Col. Sir Alan
Moyle, A.
Williams, Rev. Llywelyn (Ab'tillery)


Gower, H. R.
Nabarro, C. D. N.
Williams, R. Dudley (Exeter)


Greenwood, Anthony
Nicholson, Godfrey (Farnham)
Williams, W. R. (Openshaw)


Grenfell, Rt. Hon. D. R.
Noel-Baker, Rt. Hon. P. (Derby, S.)
Williams, W. T. (Barons Court)


Grey, C. F.
Osborne, C.
Willis, Eustace (Edinburgh, E.)


Griffiths, Rt. Hon. James (Llanelly)
Padley, W. E.
Yates, V. (Ladywood)


Grimond, J.
Paling, Rt. Hon. W. (Dearne Valley)



Hale, Leslie
Parker, J.
TELLERS FOR THE NOES:


Hall, Rt. Hn. Glenvil (Colne Valley)
Parkin, B. T.
Mr. Tudor Watkins and Mr. Idwal Jones.

Bill read a Second time and committed.

FINANCE BILL

Again considered in Committee.

[Sir GORDON TOUCHE in the Chair]

New Clause.—(REMOVAL OF TREASURY'S POWER TO CONSENT TO MIGRATION OF A COMPANY.)

Section four hundred and sixty-eight of the Income Tax Act, 1952 (which restricts certain transactions leading to the migration of a company outside the United Kingdom), shall have effect as if there were left out of that section (a) in subsection (1) the words "unless carried out with the consent of the Treasury" and (b) subsection (4).—[Mr. Mitchison.]

10.9 p.m.

Mr. Mitchison: Before this interval about water—I understand that it was about water—I was moving a new Clause relating to migrating companies. The present position, of course, is that under the Section of the Income Tax Act which we seek to amend the consent of the Treasury is required for a company desiring to establish itself abroad, or to transfer, speaking generally, part of its trade or assets or so on abroad under what I may call non-resident control.
The real substance of the transaction is that no non-resident enterprise is to be created in the form of a company or its trade except with Treasury consent. This provision was introduced in 1951, and it became part of the Income Tax Act, 1952. We have been discussing earlier in the proceedings of the Committee something quite different, but substantially intended to deal with transactions broadly of the same character. What we have been discussing is the establishment and treatment of overseas trading companies which will not be non-resident, but will be resident, but will, on the other hand, carry out their business overseas.
That has been put forward by the Government' as a method of dealing with inequalities of taxation and other exceptional difficulties which are said to have hindered overseas trade. The suggestion, in effect, is that if English people desire to trade overseas, the overseas trading company resident in this country will serve the purpose, and will place them, broadly speaking—we agree that it is an experiment—on a fair footing and on a footing of equality with other

nationals trading in the countries in question.
For the purpose of this new Clause, I must, of course, assume, contrary to the doubts that many of us hold in the matter, that the Government are right in supposing that overseas trading companies will work, that they will, in fact, enable an English directorate or control of a company resident in England to trade overseas without any undue difficulty. The question is whether, in those circumstances, it remains necessary to keep the possibility of migration, as the phrase is commonly used. In fact, though the consent of the Treasury is required, very extensive general permissions have been given, and as far as I know, on the only occasion when this matter was discussed in Committee, which was in 1952 not very long after the Section had been embodied in the Income Tax Act, the position was that out of 300 applications, probably, as far as I can judge, fairly recent ones, only two had been refused.
In that discussion in 1952, the Lord Privy Seal, who was then Chancellor of the Exchequer, on 28th May of that year, stated in general terms his plans for further facilitating moves of this kind. There is no doubt, of course, that extensive use has been made of migration, and this was obviously before the present alternative was put forward. The matter was considered by the Royal Commission on the Taxation of Profits and Income, in the Majority Report, and I accept its summary of the position about migration. In its Report, the Commission was leading up to the proposition which, while not quite the same as that which the Government have put forward under Part IV of the Bill, was, broadly speaking, on those lines. It was dealing with the difficulties that there might be in connection with overseas trading by British companies, and this is what it said in paragraph 641:
It is said that if such a company"—
and that means a company that retains its management and control in the United Kingdom—
finds the burden of United Kingdom tax oppressively heavy, it can 'emigrate' by shifting the control and management overseas. There are well-known cases of such emigration in recent years.


10.15 p.m.
It refers to the necessity for Treasury consent, which it describes as
an exceptional and, no doubt, temporary requirement
to which it refers later in its Report. It continues as follows:
But even supposing that the management and control of a company can be expatriated at will in this way (in itself a very large supposition) the general interests of the country are certainly not served by any avoidable inducement towards such movements. Once the company becomes truly localised abroad, there must follow some break in a whole series of connections which are valuable to us in the maintenance of our general economy and the prestige which is an element of it—connections with banks and insurance companies, with financial institutions, with makers of equipment and furnishers of supplies, with the sources of recruitment of new staff. And these things are themselves interdependent. There is a natural tendency, for instance, for orders of plant and equipment to go to the country in which the engineer responsible received his technical training. Generally speaking, therefore, the United Kingdom ought to aim at conditions which favour the management and control of overseas business being retained in this country.
The whole object of Part IV of this Bill—and the Government are confident that they have attained the object is just that, to retain in this country the management and control of overseas businesses. The Majority Report says quite correctly —and this was in 1955, about two years ago—that
There are well-known cases of such emigration in recent years.
These cases have certainly not diminished. We all know that some shipping companies, for instance, have moved their control, or the control of some subsidiary companies, to Bermuda. Some have tried to do so and been turned down, and others at the moment, as far as I know, are thinking about it. No doubt they are having a good look to see how Part IV of the Bill works.
It seems to me there are two alternatives. Either the Government have some reasonable confidence in the whole scheme of overseas trade corporations, the scheme which, after all, was at any rate foreshadowed and supported in this Report, or they have not; and if they have that confidence the arguments so neatly and shortly put in that paragraph apply in favour of the overseas trade

corporations and they apply against the emigration of companies.
I quite appreciate that as long as there is a question of Treasury control, especially perhaps under a Government who rather hesitate to interfere with big business in these matters, in these circumstances the Treasury might find it difficult to control emigration. No doubt we shall be told that the beginnings of the scheme at any rate were that there were practically no refusals. That is one side of the matter. That is the side of the company.
However, there is another point. That Section 468 of the Income Tax Act, 1952, has as its heading, "Restriction of certain Transactions leading to avoidance of income tax or profits tax." It may be, and the Majority Report rather trends that way, that that is a slightly harsh way of putting it, but it is certainly true that the establishment of a non-resident company in place of a resident one, even if the resident one gets the overseas trade corporation concession in Part IV of the Bill, means a certain loss of Revenue. I hope that the Economic Secretary, if he is going to answer, will give us a little information.
The Lord Privy Seal's statement about only two refusals was made at the end of May, 1952, and although there had been then rather longer experience of the Section in the 1951 Act—and I am not clear whether his figures referred to that as well as to the Section incorporated in the 1952 Act—in any case that experience was quite short. Can the right hon. Gentleman give us any figures as to the numbers of companies that have emigrated with Treasury control since the Income Tax Act came into force, or since some other convenient date such as over the last three or four years? Can he tell us the number of refusals, and the amount of capital movement involved in some general terms? Lastly, and this is a point which I hope very much that the right hon. Gentleman will be in a position to answer, what was the resultant loss to the Revenue of these movements over some convenient period?
The loss obviously must have been substantial, because the Committee is well aware that a non-resident company, even if it is incorporated in this country, is treated for the purposes of Income Tax


exactly, or substantially, as if it were a foreign company. Therefore, any transaction of this sort must result in considerable loss of revenue. We on this side of the Committee suggest to the Government that from the broad national point of view, the company, trading, industrial point of view which appealed to the majority of the Royal Commission, these transactions are not satisfactory if an alternative can be found.
If the Government think that the overseas trade corporations will work, then obviously they are an alternative. If the Government think that they will not work, perhaps they should consider whether they ought to proceed with Part IV of the Bill. But, for the purpose of this new Clause, we must assume that the Government believe that they have not put before the country an unworkable proposition.
Secondly, if the overseas trade corporation works and if it is broadly satisfactory to industry, to the companies concerned and those occupied in overseas trading of this sort, then it is obvious that overseas trade corporations will not involve the serious loss of revenue which similar transactions in the form of establishing non-resident companies would be bound to involve. I do not want to be told, nor do the Committee, that, of course, the Clause goes beyond that and covers various devices and various transactions which, broadly speaking, all have the effect of putting something into the nonresident sphere that previously was in the resident sphere. I quite accept that the Government may say, "This is a rather large order. We have not had time to try out overseas trade corporations yet."
To that extent, this is a probing new Clause, but we seriously submit to the Committee that the reasons which made it necessary to allow migration as freely as it appears to have been allowed in the past cannot exist side by side with the establishment of overseas trade corporations, and that the Government ought either to accept the complete withdrawal of migration facilities or ought to indicate that a very different and much more critical line will be taken in future.
I mention one last case because it is nearly, though not exactly, the same. We all know the difficulty about moving

shipping companies and the control of ships. Our own mercantile shipping arrangements are a great deal better than those of some other countries. I need say no more. That is another instance of pushing into another country assets or companies, as the case may be, which in the best interests of this country we believe ought to remain here.

Mr. J. Grimond: The astonishing thing is that Section 468 of the Income Tax Act, 1952, is still on the Statute Book after six years of Conservative rule. This proposed Clause is a repetition of a Clause in the Finance Bill of that year which was denounced bell, book and candle, by the Conservative Party when it was introduced by the Socialists. The right hon. and learned Gentleman the Member for Kensington, South (Sir P. Spens), who speaks with authority on these matters, said that the Clause was so bad—
…and the injury it will do to this country is so great that I believe its influence will be remembered long after the rest of the Budget is forgotten."—[OFFICIAL REPORT, 3rd July, 1951; Vol. 489, c. 2210.]
The present Foreign Secretary said:
…it is definitely going to be a bar to imperial and colonial development."—[OFFICIAL REPORT, 2nd July, 1951; Vol. 489, c. 2050.]
Again one of their leading authorities on economics said:
This Clause is extremely interesting from other aspects beside the legal one, because it is an assessment by the Socialist Government of the fines necessary to keep a joint stock company within the beneficent frontiers of the Socialist State.

Mr. H. Hynd: Who said that?

Mr. Grimond: Lord Chandos. He continued:
Yet here we have a Clause which, in effect, is going to shut out British enterprise from developing and opening up these resources. The Clause as it stands is one of the most restrictive."—[OFFICIAL REPORT, 8th May. 1952; Vol. 487, cc. 1792 and 1793.]

The Deputy-Chairman: I do not want to interrupt the hon. Member, but this Clause does not propose the repeal of that Section of the Income Tax Act of 1952.

Mr. Grimond: With respect, Sir Gordon, surely it is in order to make some general remarks about the nature


of the Clause? I understood you would allow the discussion to cover that. However, I only wish to mention those statements of the Conservatives as an interesting example of what was at that time thought by the Conservative Party about that Clause in the Income Tax Bill.
The fact is that I believe there are more recent figures about the number of applications than those given by the hon. and learned Member for Kettering (Mr. Mitchison). Up to 1954 there had been 878 applications under that Section, of which fourteen were refused. I join with the hon. and learned Member in pressing the Government to give us more information about the grounds upon which such applications have been refused, and also to give us more up-to-date information about the numbers. After all the talk about the opportunity State and setting the people free surely we have now reached the position when that Section of the 1952 Income Tax Act should be repealed. If there is any truth in what has been said by the Government, they should have confidence that companies will remain in this country. Then was another point about the legal position of directors. That, too, was strongly objected to by hon. Gentleman opposite. If this restriction was necessary then, it is not necessary today, and so we should not be making it tighter today. It is a restriction which should either be lessened or abolished, and I should say abolished. The last thing we want to do is to put a total ban, as is suggested, on any move overseas by any company, even with Treasury consent.
The new Clause proposed earlier in the Committee can be used to argue either way. But at the time Section 468 was passed the inducement to a company to move overseas was the fact that it would thereby avoid certain liability to taxation. That has been reduced in the present Measure and so there will not now be the same incentive to move overseas. I argue that this is an additional reason for doing away with that Section of the Income Tax Act, rather than tightening it up. I ask the Financial Secretary to tell us a little more about the operation of the Section, to recollect the terms in which it was abused by his own party when it was introduced, and to say that,

so far from tightening up the restrictions, he will take an early opportunity of abolishing the Section altogether.

10.30 p.m.

Mr. Birch: The hon. Member for Orkney and Shetland (Mr. Grimond) has made a violent attack upon this proposed new Clause. I would not go as far as he has, although I oppose it
This Clause as drafted seeks to remove any option that the Treasury may have to sanction a move of a company overseas, and it also takes away the power of the Treasury to allow a company which is resident overseas to issue shares or debentures.
On the question whether or not it is necessary to retain the power of the Treasury to allow these things to happen. I would remind the Committee that one of the main objects of the overseas trading legislation is to induce companies to stay here. But what would happen if we removed the power of the Treasury to sanction these matters? Suppose that some country overseas were to issue legislation to the effect that companies operating in a certain industry in that country must be resident there. There we would have a case in which force majeure was applied. If a company were to continue to operate there at all, it would have to migrate from this country. Further, that country might legislate that the resident control had to be in that country whereas under the O.T.C. legislation the control has to be in this country.
In addition, in many countries, although force majeure is not applied, it may be extremely difficult to keep control in this country and it may be necessary for political reasons that the company should go. If we are to retain our interest, there must be this option for the Treasury to allow such a company to go.

Mr. Mitchison: It seems to me that the right hon. Gentleman is confusing two things. One is what this Section of the Income Tax Act is concerned with, and that is the transfer from this country to an overseas country of the residence of an existing company. There is nothing in that Section to prevent a company forming wherever it may be—Lichtenstein, Egypt or Kamskatka—

Mr. Birch: Surely the point is that an overseas trading company is resident in this country, and it may very well be necessary politically for that residence to be transferred.
On the second point, the object of Section 468 of the Income Tax Act, 1952, in laying down that the issue of shares or debentures could not be made by controlled companies overseas without the permission of the Treasury, is to prevent devices for the avoidance of taxation. If that power of the Treasury were removed, such a company resident overseas would be prevented from issuing shares or debentures for the purposes of genuine development. I do not think that the hon. and learned Member had that point in mind in moving this Clause.
I see the hon. and learned Gentleman's object, but the effect of the Clause if it were accepted would be that a company which might be forced for political considerations to migrate could not do so, and therefore would lose its business. Further, the issue of capital for genuine purposes would he prevented.
The hon. and learned Gentleman about the figures. I think there are four prohibitions in Section 468. It is a long Section and it includes this question of shares and so on. The total number of applications has been in the region of 1,700. I have not got the breakdown of the figures, but I think the majority of them are issues of shares or debentures. There have been 28 refusals.
The real merit of this sort of Clause is that it is in terrorem, and the people who might be tempted to try to "pull a fast one" do not try it when this sort of power exists. This power—it is one of the things I look at when I am at the Treasury—is most carefully exercised, and the hon. and learned Gentleman can rely upon the Treasury exercising its good sense in the national interest. I ask the hon. and learned Gentleman to withdraw the Clause, because if passed in this form it would be unduly hampering. Certainly, in the issue of shares and debentures, it might produce some absurd results.

Mr. Mitchison: Can the right hon. Gentleman tell us anything about the resulting loss of revenue? Can he say, for instance, whether the recent transfer of residence of companies operating in

Trinidad connected with the oil business required Treasury consent under the Section?

Mr. Birch: I will supply the information to the hon. and learned Member. I cannot give it off the cuff. The question of the loss of revenue would not arise in the issue of shares and debentures by controlled companies overseas. Consent is not given unless it is thought to be in the national interest that it should be given.

Mr. H. Rhodes: Surely, a company could be forced to migrate for other than political reasons. There could be economic reasons also. It is interesting to listen to the comments on both sides now on this problem when we think that in perhaps a few weeks' or a few months' time the question of the European Free Trade Area will arise in the House. Then, where will we stand? As far as I know, two of the principal planks in supporting the programme of the Free Trade Area of the Messina countries is that there should be free movement of capital and free movement of labour.
I can quite see that a lot of small companies in this country would not be able to do the sensible thing and migrate. On the other hand, there are quite a lot of large companies with large resources which could do just that. If they wanted to relinquish business because a considerable amount of competition was coming from abroad, there is nothing to prevent a third party from overseas from buying the control of that business and paying highly for the "know-how" so that it could take the business to a country where the labour was cheap and the facilities were better.
We ought to be very careful about this in saying how much we are going to prevent or how much we are going to allow at this juncture. Without any question, the House will have to make a serious decision about this at an early date. I do not see how there can be a logical European Free Trade Area without the free movement of capital and the free movement of labour.

Mr. Roy Jenkins: I am surprised that the Economic Secretary would not give us firm information about the position in regard to the Trinidad Oil Company. I certainly understood that at the time we


were assured in a White Paper, for which, I believe, the right hon. Gentleman voted. that permission was both required and given.

Mr. Birch: Certainly it was given.

Mr. Jenkins: I am very glad that the right hon. Gentleman is now clear about the position, because, in view of the very controversial question which led to a Division in the House—in which he took part—it was a little surprising to find that he was apparently quite unaware of what occurred on a previous occasion. I am glad that he had been converted, in the course of the past six years, to an appreciation of the in terrorem advantages of this part of the Income Tax Act which, as was pointed out by the hon. Member for Orkney and Shetland (Mr. Grimond), was not the view of the party opposite during the long night in which we debated this proposal in 1951, when it was introduced into our tax legislation.
Even if the leader of the Liberal Party was more immoderate than the Economic Secretary on this issue, he was also probably more logical. I do not understand that the Liberal Party is so enamoured of Part IV as are the Government and hon. Members opposite. We put down the Clause to express our bewilderment at the conflicting views upon this issue to which we are constantly asked to listen by hon. Members opposite. We have been told for a very long time that it is quite disastrous that for tax reasons we should have companies migrating overseas. We are told that this does great damage to our economy; that it damages our export prospects and our financial prestige, and all sorts of other things.
Even on this Finance Bill we have had that argument put in regard to more than just Part IV. We have heard it in regard to the special treatment given to shipping companies by way of investment allowances. It was then argued that it was desirable to prevent these companies—who are highly mobile by their very nature—from going to Bermuda and other places. In this Finance Bill alone we have had two important and expensive measures brought forward and argued very largely in terms of the desirability of removing the incentive to

these companies to migrate, because, we were told, it was vital to our national interests that they should not desire so to do.
Yet, when we debate the Bill in detail, we are constantly told, particularly by the right hon. and learned Member for Kensington, South (Sir P. Spens)—who has been most eloquent on this point—that it is highly desirable in a great number of cases that companies should migrate. We are a little sceptical about the logicality of the Government's position on this issue. What do they want to happen? Do they want companies to migrate, or do they want them to stay in this country? It is not good enough to say that circumstances alter cases and that we must come to an entirely empirical judgment in each case. If we adopt this entirely empirical attitude, where we say that it does not very much matter about general principles, and that the requirement varies from case to case, that is a rather slender foundation upon which to erect Part IV.
We put down the Clause in order to express our dismay at the confusion of argument which seems to us to have come from the Government side of the Committee on this issue. I do not think that even the Economic Secretary, let alone any other hon. Member opposite, has done anything to clear up this confusion of argument which we have heard throughout our discussion on Part IV.

Sir P. Spens: Theoretically, what the hon. Member has just said has a great deal to be said for it, but we must surely look at the facts as they are. As I understand it, the facts are that for a number of years, for tax reasons, quite a number of companies have been migrating abroad. Many of my hon. Friends and many hon. Members opposite think that it is desirable that they should be stopped, if possible, and that we should keep companies in this country.
But we know two things. First, we know that there are already many companies overseas. What will happen to them? We have to realise that they are there. Secondly, as my right hon. Friend said, there are many areas of the world where, either for economic or for political reasons, it is desirable that the control of the companies should be abroad. All I want to do is to accept the facts as I find them and get away from theories


altogether. I want to do everything possible to increase the trade of this country.

10.45 p.m.

Mr. Roy Jenkins: Acting on the very important principle laid down by the right hon. and learned Gentleman that we should get away from theory and deal with the facts, may I ask whether we can have an assurance from the Government that, as it is the right hon. and learned Gentleman's view that one of the very important reasons which previously made it desirable for companies to migrate has now been removed, the Treasury will take a slightly different view of applications for migration? In that case, may we expect a higher percentage of refusals than the minute percentage that we have seen in the past?

Question put and negatived.

New Clause.—(WIDOW OR WIDOWER'S ALLOWANCE OF CHILDREN OR HOUSE- KEEPER.)

(1) For subsection (1) of section two hundred and fourteen of the Income Tax Act, 1952 (wh.ch relates to a person taking charge of a widower's or widow's children, or acting as his or her housekeeper), there shall be substituted the following subsection:—
214.—(l) If the claimant proves that he is a widower and that he has living at any time during the year of assessment a child or children or that a person is resident with him in the capacity of a housekeeper, he shall subject to the provisions of this section be entitled to a deduction from the amount of income tax with which he is chargeable equal to tax at the standard rate on sixty pounds".

(2) In subsection (3) of the said section the words "with the substitution of 'her deceased husband' for his deceased wife shall be deleted.—[Mr. Holt.]

Brought up, and read the First time.

Mr. Arthur Holt: I beg to move, That the Clause be read a Second time.
The proposal here is to broaden the effect of Section 214 of the 1952 Income Tax Act, which permits widow's or widower's allowance only where the person carrying on the work of the deceased is resident in the house. The proposed new Clause would give the allowance to the widow or widower with children and also if the outside person is merely a housekeeper. We are not concerned with the housekeeper aspect of the matter. We originally made a slight error which was

pointed out by the hon. Member for Sowerby (Mr. Houghton), and we altered the drafting in respect of housekeeper allowance. That is not the purpose of our proposal tonight.
The effect of our proposal would be to make an allowance to a widow or widower who has someone resident in the house to look after a child or has a daily help or child-minder; or even where there is no second person involved at all and the widow or widower incurs expense possibly by sending the child to a crèche or day nursery, which would not have been necessary had the other partner to the marriage been alive. Only to that extent does this proposal broaden the effect of Section 214.
Our proposal is one of the numerous recommendations in the Millard Tucker Second Report, and is found in paragraph 200 (c). That Committee made the following comments:
The allowance to a widow or widower for the expense of a child looked after by another person seems to us to cover only partially the real reduction of the capacity to pay that takes place when one of two married persons is left by the other's death with responsibility for dependent children. The extra expense may take the form of employing a resident housekeeper. That is the event that the present allowance provides for. Or it may take the form of employing a non- resident child-minder. It is a moot point whether that is covered today. But again, it may take the form of putting the child out in a crèche or day nursery. That is certainly not covered…
The paragraph goes on to recommend that these expenses should be covered, that is to say, expenses incurred in looking after the child should he covered whether a person is employed either daily or in residence to assist in looking after the child. That is the purpose of this Clause.
This is a matter which I am sure hon. Members are constantly coming up against in their constituencies. I have known a number of such cases, particularly of widowers rather than widows, but no doubt it works the other way as well. A number of widowers have come to me and complained about this, particularly from homes where the income is only moderate. They are not able to pay for a resident help, but are incurring extra expenses. If this Clause were accepted as an amendment to the 1952 Act those cases would be covered. I hope the Government will accept it.

Mr. Powell: The plain effect of the Clause is to provide additional child allowance of £60 for the first child of a widow or widower irrespective altogether of circumstances. That is the proposition that the Committee is asked to consider. I would simply put to the Committee that such a provision would create a quite indefensible distinction between the circumstances of any widow or widower with dependent children on the one hand and any married couple on the other with such dependent children.
In the case of a married couple with a dependent child or children the mother might be partly or wholly incapacitated. There might be a case, there commonly is, where both parents go to work. In those cases, and numerous more instances which could be mentioned, similar commitments have to be incurred by the parents having dependent children and there is a similar limitation on taxable capacity. It would, therefore, be quite indefensible simply because there is the status of widow or widower, without further qualification, to increase in this way the child allowance.
The only national dividing line which has so far been found in this matter is of necessity that there shall be in the place of the spouse who is dead, normally the mother, an actual member of the household for the sake of looking after the children. Once that qualification is departed from—the qualification of a resident housekeeper—the extra burden which is assumed becomes one which it is quite impossible to assess. It might be a child-minder, it might be a daily help, it might simply be occasional help, or it might be—aS is envisaged in the Clause—circumstances where there are no additional commitments whatsoever. I must, therefore, recommend the Committee not to depart from the basis in the existing Income Tax law which renders the allowance in the case of a widow or widower with a dependent child or children dependent on employment of a resident housekeeper.

Mr. Douglas Houghton: For Income Tax purposes the housekeeper allowance is not free from either difficulties or anomalies. In its Second Report, the Radcliffe Commission was not as specific or emphatic about its remedies for these difficulties as it might have seen. The hon. Member for Bolton,

West (Mr. Holt) made a slip of the tongue when he referred to the Report of the Millard Tucker Committee. I am sure that he was referring to the Second Report of the Royal Commission on Taxation of Profits and Income. In fact, he quoted from that Report.
We on this side of the Committee would prefer to deal with a reform of the housekeeper allowance more comprehensively than in this way. There is undoubtedly the question of relationship with the housekeeper to be cleared up. Section 214 of the Income Tax Act, 1952. requires a taxpayer to prove that unless the housekeeper is a relative of his own or that of his deceased wife there is no such relative of his own or of his deceased wife available or willing to undertake the task. That, I think, is a quite unnecessary requirement. I would almost describe it is as an impudent requirement.
I do not think that a taxpayer should be required to satisfy the Inland Revenue that he has scraped round for some relative of his own or of his deceased wife to become his housekeeper, but, unhappily, has failed and has had to find someone else. In point of fact, I really doubt whether any taxpayer is subject to any such inquisition. I have never heard of one. However, it is in the Act, and I think that it should be removed.
There is also the question of residence. This is a difficult one. The Royal Commission in the paragraph quoted by the hon. Member for Bolton, West referred to the question of the child-minder not resident. Not all widowers, for all sorts of reasons on which I need not dwell at this hour of the night, find it convenient or desirable to have a resident housekeeper. Yet they incur expense in getting a child-minder to look after their children. The Commission pointed out that if the expense of putting the children into some sort of crèche during the day was incurred there was no allowance for that. The allowance was solely in relation to the housekeeper, though, of course, the widower would be getting the normal child allowance. The Radcliffe Commission made the suggestion which the hon. Gentleman has incorporated in this proposed new Clause.
I do not think that we should wish to press this matter on the Government just now. We would hope that it could be


added to those matters which the Chancellor has promised to consider during the coming year. It certainly needs attention, and although we are sorry not to he able to follow the Liberal Party in its newly-found fighting form and carry the matter to a glorious conclusion, it has our sympathy. We would rather support the Liberal Party on more comprehensive reform than that of the personal allowance.

Question put and negatived.

New Clause.—(RESTORATION OF INVEST- MENT ALLOWANCES FOR INVESTMENT IN COMMONWEALTH COUNTRIES.)

(1) Subsections (2) to (5) of section sixteen of the Finance Act, 1954 (which provide for giving investment allowances in respect of capital expenditure on certain new assets) shall apply to expenditure incurred after the commencement of this Act, being expenditure incurred on new assets in or exclusively for their use in a Commonwealth territory.

(2) In this section "a Commonwealth territory" means one of the Commonwealth territories, as defined in section thirty-six of the Finance Act. 1950, or Pakistan or Ceylon; and "expenditure incurred on new assets exclusively for their use in a Commonwealth territory" includes expenditure incurred in the provision, insurance, preservation, warehousing and transport of new assets in the United Kingdom and in their passage from the United Kingdom to the Commonwealth territory.— [Mr. Roy Jenkins.]

Brought up, and read the First time.

Mr. Roy Jenkins: I beg to move, That Clause be read a Second time.
The Clause seeks to restore the investment allowances as they existed under the Finance Act, 1954, for overseas development provided that it is done in a Commonwealth country. The Clause was put down as an indication that although we could not accept Part IV of the Bill there were alternative means by which we should like to help certain forms of British companies operating overseas.
11.0 p.m.
It was put down, before we came to debate Part IV, as an alternative to the Government's scheme. We are now, as is normal in the procedure of a Finance Bill, discussing the new Clause after Part IV has been passed, and we would not suggest that what is contained in the new Clause should be given on top of that which the Committee has decided should be given. Therefore, we are, in a sense,

discussing something which is now, perhaps, more a symbol than a practical proposal. Were we in the position in which Part IV had not gone through, this is what we would very much have preferred to see done.
The reasons for preferring to see it done in this way are simple and straightforward. First of all, our Clause would confine the help given to companies operating in Commonwealth countries, and would not be extended to all sorts of overseas development provided the companies were resident in London. Secondly, it has always been the view on this side that when it is desirable to stimulate development, the investment allowance is the mechanism best fitted to achieve that in the most direct and economical way; that help would he given only to the extent that investment is actually carried out; that it is of all forms of taxation that which bears most directly upon the ability of the company to carry through schemes of expansion, and that it has, perhaps, less effect upon shareholders.
I do not quite know what the attitude of the Government is to overseas company concessions, but from the Bill as presented—and certainly from the series of speeches made by the Financial Secretary, both on Second Reading and in this Committee—we gathered that the intention was to confine this help as narrowly as possible, so that the overwhelming part of it went to the companies, as the developing organisations, and as little as possible seeped through to the shareholders. It is true that the Chancellor went so far as to say that he thought that anything that helped shareholders was a good thing, but, that apart, it does appear to be the case that here the intention is to give the least direct help to shareholders.
An investment allowance would, of course, do this far more neatly and accurately than would the form of the general concession contained in Part IV of the Bill. Therefore, we think that this scheme which we would have put forward as an alternative is indicative of the fact that we are not unwilling to help British companies operating overseas, and particularly in the Commonwealth, but that it could have been done more economically and accurately, and at least equally beneficially, by this alternative method.

Mr. Birch: The hon. Member for Stechford (Mr. Roy Jenkins) has said, quite rightly, that at this stage of the Bill this new Clause is, perhaps, a little academic, but it is, of course, very much a renewal of the argument we had on Clause 22. As far as stretching the investment allowances goes, my right hon. Friend the Chancellor made it clear in his Budget speech that he intended to give them only to shipping companies, and that they were, as he said, a unique step for a unique industry.
We had the hon. Member's approval when we resisted schemes for extending the initial allowances to the shipbuilding industry, and we did want to cut down the extension of the investment allowances. When we argued much the same case on Clause 22, we also said that one of our reasons was that, as far as we could do so, we wanted to avoid discriminatory taxation. The actual provisions in the Bill for overseas trade corporations will do a great deal to assist investment in the Commonwealth. That is one of the many objectives that will be attained, but that investment will be assisted by the fact that reserves can be built up out of earnings.
I was glad to note, during the course of this Bill, that several hon. Members opposite have pointed to the fact that the real difficulty is the shortage of funds to invest and not the opportunities to invest them. It might be dangerous to have the very strong stimulus to investment which this Clause would give at a time when our resources and foreign exchange balance do not encourage us to lend, or should not encourage us to lend, indiscriminately and very largely.

Mr. Roy Jenkins: The right hon. Gentleman is arguing that this Clause would be a stronger stimulus to investment, at least in the Commonwealth, than Part IV of the Bill?

Mr. Birch: It certainly would be, on top of Part IV. It is very difficult to say, but it would be a very strong stimulus indeed, and the point about stimulus to investment in overseas trading corporations is that it depends upon their building up their earnings. The investment allowance is the strongest stimulus one can give to investment.
Another more technical argument against this is that it would have a rather

curious result, because, under Paragraph 13, Section (1) (a) of the Fifth Schedule, the effect would be this: if one were winding up a company and the exempt trading income on the winding up became subject to Income Tax, any allowances granted under this Clause would be deducted from the exempt trading income before it was subjected to tax. Therefore, it would be giving a rather uncovenanted benefit to a company on a wind-up. But I do not press that argument.
On general principles, we think the Chancellor has gone as far as he can on investment allowances; we do not like the general theme of discrimination in this, and it would give too strong a stimulus.

Mr. H. Wilson: Although the hour is late, we cannot let that speech go without some comment. I found it peculiarly disappointing. We have noticed throughout the proceedings of the Committee on the new Clauses, almost without exception, that every new Clause moved from the opposite side, if it has not been accepted, has been greeted with the promise that, at any rate, the Chancellor would consider it for next year. I think that the Treasury Bench Ministers have gone further than usual in that direction. All of us took it extremely seriously last year, when the then Chancellor promised to consider only about two proposals—one on pioneer industries tax concessions and the other on Entertainments Duty on the living theatre. But this year they have rather debased the currency and have promised to consider seriously any new Clause—when put forward by hon. Gentlemen behind them. That is one reason why the Minister's reply is unsatisfactory.
Another reason is that he does not seem to have perceived that this was put forward by us as an alternative to Part IV of the Bill. Of course, he can produce the argument that Part IV, having been accepted by the Committee, with this Clause on top an additional loss is caused to the revenue. But we put it forward as an alternative to the 29½ pages which we debated at breakneck speed on Part IV and the associated Schedules. This particular Clause does more than the whole of Part IV and, on the right hon. Gentleman's own admission, is a more vital contribution to Commonwealth develop-


ment. We agree that if the Bill were to be written round this new Clause there might be one or two consequential changes to be made. The right hon. Gentleman mentioned the very difficult technical matter arising out of the Fifth Schedule, but if this new Clause were substituted for Part IV there would be no Fifth Schedule, and so it would not he necessary to make so many changes.

Sir P. Spens: I have been a Member of this Committee for a very long time, but I have not heard of a new Clause being moved as an alternative to a Part of a Bill already accepted by the Committee. Both the right hon. Gentleman the Member for Huyton (Mr. H. Wilson) and the hon. Gentleman the Member for Stechford (Mr. Roy Jenkins), who moved the new Clause, have made it clear they do not want the Committee to agree to it, and that it is only an alternative to provisions the Committee has already agreed to. In those circumstances, ought we to waste any further time on the new Clause?

Mr. Wilson: The right hon. and learned Gentleman, with his Amendments, has occupied more of the time of the Committee on this Bill than any other Member in any other part of the Committee, so I hope he will not begrudge us this little Clause, even at this late hour. The Economic Secretary has already admitted that it would be more potent than the whole of Part IV. As the right hon. and learned Gentleman has been a Member of this Committee for a very long time, he may have noticed that there has been a big change in the proceedings on the Finance Bill this year, and that is the Government's willingness to consider every new Clause moved, and so I am not without hope that the right hon. Gentleman, on being convinced of the value of this new Clause, will withdraw Part IV on Report and substitute this new Clause for it.

Mr. Mitchison: I would remind my right hon. Friend that the right hon. and learned Gentleman the Member for Kensington, South (Sir P. Spens) in his last effort to correct what he thought the misdemeanours of the Chancellor, having moved a new Clause, immediately sought leave to withdraw it.

Mr. Wilson: The Economic Secretary admitted that this new Clause would make a very big contribution, whether

Part IV was in the Bill or not, to Commonwealth development. I was distressed to learn from certain noises by certain Members opposite inside and outside the Conservative Party that apparently they do not think a proposal to increase investment in the Commonwealth an extremely important thing. I was surprised that Commonwealth supporters—ex-supporters of the Commonwealth, I suppose they must be—should no longer be as concerned with Commonwealth trade as they were at one time.
As my hon. Friend the Member for Stechford (Mr. Roy Jenkins) said, we are aiming to do two things, to do everything that in the mind of the Government is reasonable, and which inspires Part IV. but also to give a very special discrimination in favour of investment in the Commonwealth. The right hon. Gentleman said we ought to avoid whenever we can discriminatory taxation, discriminatory tax concessions, and so on. There was the special case of shipping —a unique remedy for a unique case, as he quoted the Chancellor on that. Yet the whole of Part IV is based on the doctrine of discriminatory taxation. It says there are two taxpayers, one of whom earns money at home. and he shall pay a higher rate of tax, and another earning money abroad, and he shall pay a lower rate of tax. So discrimination is introduced as one of the basic policies of this Finance Bill.
I say there is an urgent need for more development in the Commonwealth. Of course, as the right hon. Gentleman said quite fairly, and as has been said many times on this side of the Committee, talk of investment, whether in the Commonwealth or elsewhere, is meaningless unless policy in this country makes it possible to create surpluses for investment. I should have thought that it did not need arguing that there ought to be more discrimination in favour of investment in the Commonwealth. Under this Government there has been a most dangerous tendency for the dollar sours, of supply to increase year by year.
11.15 p.m.
It was the declared policy of the Labour Government to reduce dependence on the dollar area as a source of supply, and to increase dependence on Commonwealth sources. It was not only declared, but achieved. Between


1948 and 1952 imports from the sterling area into this country went up by 25 per cent., while imports from the dollar area were cut by 6 per cent. From 1953 to 1956, under the regime of hon. Members opposite, imports from the sterling area have fallen by 2 per cent., and imports from the dollar area have risen by 30 per cent. That is the result of deliberate policy. This week there was the announcement of a further liberalisation of imports from the dollar area.
This does seem to suggest to us an urgent need for a reversal of this policy. We want more capital investment in the Commonwealth encouraged. That is the purpose of this New Clause. As I have said outside this House—and I am sure hon. Members opposite, if they search their hearts, will agree—if this Government had pursued more trade with the Commonwealth with one-tenth of the energy put into the European Free Trade Area, our economic position could be very different. This new Clause is directly designed to that end. I am very disappointed that the Economic Secretary not only rejects it this year, but does not even say that he will ask the Chancellor to consider it for next year.

Question put and negatived.

New Clause.—(EXEMPTION FROM STAMP DUTY OF CONVEYANCES RELATING TO PRIVATE DWELLING HOUSES.)

(1) In any case where a conveyance on sale is executed in respect of:—
(a) a piece of land together with a private dwelling-house erected thereon, or
(b) a piece of land not exceeding one acre in area and such conveyance is expressed to be for the purpose of erecting a private dwelling-house on the said land, and the interest in the property so conveyed is not less than the fee simple absolute or a term of years absolute of not less than sixty years, the said conveyance shall not, by virtue of the provisions of the Stamp Act, 1891, be liable to stamp duty.

(2) If, within a period of two years, or such longer period as the Commissioners of Inland Revenue may allow, from the date on which the person to whom is conveyed any property referred to in the foregoing subsection becomes entitled to possession thereof, there is such a change of use of the dwelling-house as to constitute development within the meaning of the Town and Country Planning Act, 1947, or, as the case may be, no private dwelling-house has been erected on the land conveyed, the conveyance on sale shall there-

upon become liable to stamp duty as if the foregoing subsection had not been enacted.—[Mr. J. Rodgers.]

Brought up, and read the First time.

Mr. John Rodgers: I beg to move, That the Clause be read a Second time.
It will be seen that this Clause is aimed at assisting people to own their own houses by exempting from Stamp Duty conveyances relating to private dwelling houses.
For a long time it has been the declared policy of the Conservative Party to try and create a property-owning democracy. I am sure, therefore, that we shall have support for this Clause from most hon. Members on these benches, and I very much hope for support from hon. Gentlemen opposite. In recent months they have put out propaganda in which they state that they believe that the more people who own their own houses the better.

Mr. H. Wilson: While that statement of our view is correct, I hope the hon. Gentleman will join with us in the policies we advocate to reduce interest rates, and thus mortgage rates—a most important factor.

Mr. Rodgers: That is a different question.
Stamp Duty has been doubled twice since its introduction. It is four times greater than when it was introduced in 1910. It was last doubled in 1947 under a Socialist Government, although it is true to say that reliefs were provided for in the case of smaller properties. Today, Stamp Duty is 5s. per £50 where the consideration does not exceed £3,500; 10s. per £50 where the conveyance is to a body of persons established for charitable purposes only or where consideration does not exceed £4.250 with the appropriate certificate of value; 15s. per £50 where the consideration does not exceed £5.000: £1 per £50 where the consideration exceeds £5,000.
When a person embarks on the purchase of a house, we all recognise that such a person is confronted with a number of legal and other charges which are somewhat discouraging. If the suggestions contained in this Clause were adopted, at least one of the financial difficulties facing the would-be purchaser would be removed.
I recognise that Stamp Duty is not confined to the sale of property as such. It is also chargeable on stocks and shares, and other things. Personally, I should like to see it reduced on shares also; but that is outside the scope of this Clause. I believe that there is a special case with regard to the purchase of new house property or land intended for that specific purpose.
I cannot do better than quote from the Report of the Scottish Housing Advisory Committee, Cmd. 6741, at paragraph 147. This Report was, it is true, published ten years ago, but it summarises the position adequately. It said:
We are aware that any concession to owner-occupiers might have repercussions on the transfer of other forms of property or of other types of transaction for which stamp duty is exigible. We should point out, however, that the stamp duty will fall to be met by the owner-occupier at the same time as he is involved in the other initial expenses of house purchase—legal expenses, removal expenses and an initial deposit on the purchase price. It is unfortunate that he should have to meet an expense of this kind at a time when he is least able to bear it. Psychologically also, the tax is payable at an unfortunate time; whereas the prospective house purchaser can see some return for his other initial expenses, he can see no immediate return for his stamp duty in relation to the house he is purchasing.
I hope that my right hon. Friend the Financial Secretary will agree that that states the case pretty fairly and puts forward most of the main arguments in support of the Clause.
It will be observed that in drafting the Clause we have limited it to conveyances of sale whereby the fee simple or a term of not less than sixty years is conveyed. We did this because the object is to encourage house ownership and we thought that some limitation on period was necessary to avoid extending the concession to transactions such as furnished lettings.
In order to prevent obvious evasions, we have provided in subsection (2) that the conveyance becomes liable to full Stamp Duty in the event of a private house not being erected on the land conveyed or being used for a purpose other than that of a private dwelling house within a period of two years from the date on which the purchaser would be entitled to possession under the conveyance. The period could be extended by permission of the Inland Revenue if for

any particular purpose the house was not erected for reasons outside the control of the would-be purchaser. It did not seem to us to be necessary to introduce the complication of a right of appeal to the courts.
I do not know what the cost of this concession would be. Perhaps the Financial Secretary would be willing to tell us what that cost would be when he replies. But I hope we shall be spared the stock Treasury answer that this might be administratively difficult and therefore is not acceptable, because it seems to me that it is the problem of the Treasury to find ways of making this administratively easy if it is desirable in the national interest.
A similar Clause, although not quite so well drafted as this, was moved in Committee on the 1946 Finance Bill. At that time it had the support of most hon. Members of the party to which I belong, and it included among its supporters no less a person than my right hon. Friend the Economic Secretary to the Treasury and other members of the Government such as the Minister of Pensions and National Insurance, the President of the Board of Trade, the Secretary of State for Scotland and so on; I could mention twenty or so other Ministers who at that time supported such a Clause. One notable name is missing from that support That is my right hon. Friend the Chancellor of the Exchequer, but I believe that it was only missing because he was not a Member of the House at that time. Otherwise, I feel that his name would have been among those others. I hope that this will not deter him or my right hon. Friend the Financial Secretary from giving the most sympathetic consideration to this Clause.
We do not necessarily press for the acceptance of the Clause in its present wording. If the Financial Secretary would like to modify it in any way, we would be quite happy. The Clause is designed with the object of stimulating a stated aim of Conservative Party policy, namely, the creation of a property-owning democracy. In that spirit, I hope the Financial Secretary will give it his most sympathetic consideration.

Mr. Powell: My hon. Friend the Member for Sevenoaks (Mr. J. Rodgers) has explained that the object of the Clause


is directed to home ownership, to facilitating and encouraging the purchase of houses for occupation by the purchaser. Of course, it is not so restricted in its terms, which extend to the purchase of all houses, whether for occupation by the purchaser or otherwise. But any modification of Stamp Duty which was dependent upon the occupation of the property or the use to which the property was put would be quite impracticable, because the Stamp Acts both require and provide for certainty in regard to the payment of duty.
The principal Act of 1891 provides that an instrument "not duly stamped in accordance with the law in force at the time when it was first executed" is not, except in criminal proceedings, "available for any purpose whatever." When an instrument is brought for adjudication to the Commissioners of Inland Revenue and is stamped by them, it is thereafter "available for all purposes notwithstanding any objection relating to duty." It is, therefore, impracticable—I am not merely riding this off on an administrative point; it is worth putting on the record—to vary stamp duty according to circumstances which may change from time to time after the transfer upon which the duty is imposed.
Therefore, the only way in which my hon. Friend's intention can be attained is by a straight reduction or abolition of stamp duty in respect of all transfers, certainly all transfers of property other than stocks and shares. This is the method which a Conservative Government have twice used, in 1952 and as recently as the Finance Act of last year, by both of which Measures Stamp Duty on transfers of property for considerations below £5,000 was reduced so substantially that today the stamp duty on a house of £3,000 is as low as £15.
I will not argue that even the sum of £15 is not a consideration or an obstacle along with the other requirements—the deposit, the legal charges, and so on—in the purchase of a house; but I do say that great strides have been made since this party came into office in 1951 towards the reduction of this obstacle to the purchase of houses. The question, therefore, is whether that process should be carried further in this Finance Bill.
My hon. Friend asked what would he the cost of the Clause. For the reasons

which I have given, it is hardly possible to estimate precisely what its cost would be, but I have looked at various possibilities and various changes of Stamp Duty such as exemption up to £3,000 and a scaling down of the present duties between £3,000 and £5,000 or £6,000. I find that no alteration in duties which could have any practical effect would cost less than £5–£6 million in a full year.
I think that my hon. Friend will, therefore, see that a further advance in the direction in which we have twice taken important steps in the last few years is, on grounds of cast, ruled out within the ambit of the present Finance Bill. I say that without any prejudice either to the purposes which he has in mind or to the possibility of taking further steps in that direction in future years.

11.30 p.m.

Mr. Mitchison: Does the hon. Member say that the Conservative Party is sufficiently interested in a property-owning democracy, and in the consequent reduction of Stamp Duty, as to take £5 million or £6 million out of the concessions the Government are making to Surtax payers in the interests of a property-owning oligarchy?

Question put and negatived.

New Clause.—(INCOME TAX RELIEF ON SMALL LIFE ASSURANCE PREMIUMS.)

Subsection (1) of section two hundred and nineteen of the Income Tax Act, 1952 (which relates to income tax relief on small life assurance premiums), shall be amended to provide that if, in any year of assessment, the total premiums in respect of which relief falls to be granted under this subsection in the case of a married man do not exceed fifty pounds. the relief under this subsection shall be a deduction equal to tax at the standard rate on twenty pounds or on the full amount of the premiums, whichever is the less.—[Mr. H. Hynd.]

Brought up, and read the First time.

Mr. H. Hynd: I beg to move, That the Clause be read a Second time.
At this late stage in the Committee's proceedings I shall be very brief. I claim that the Clause will deal with an anomaly which has been inherited by the Chancellor of the Exchequer, and I hope that it will give him an opportunity of correcting it. I am afraid that the Clause, as it appears on the Amendment Paper, does not reveal the real purpose that we have in mind, and I would therefore like to


remind the Committee that in the 1952 Income Tax Act it is provided that premiums for insurance, up to £25, carry a full rebate of tax up to £10. Whether that is on the husband's life or the wife's life, or is taken out by the husband or the wife, it is lumped together to a maximum of £10. That applies even where the wife is separately employed, has an income of her own, and has taken out a separate policy.
I contend that that is unfair and should be put right as quickly as possible. In these days, when so many wives are earning separate incomes, it is all the more burdensome, and there is all the more reason why the Government should look at the position. This would be an important concession, which could have quite a considerable effect in encouraging people to save in this way. As it would not cost the Treasury very much, I suggest that this is a suitable concession to make in this Finance Bill.

Mr. Powell: The hon. Member for Accrington (Mr. H. Hynd) does not think that this Clause would cost very much by way of revenue. I do not know what he means by "very much", but the actual cost would be £8 million, or thereabouts. It is worth pointing out that the benefit of that £8 million of remission would go almost entirely to people who are already paying premiums of between £10 and £150, so that the great bulk would not go to the encouragement of extra saving by way of new insurance policies being taken out.
The hon. Member related his case in part to the question of a husband and wife both with incomes and both with insurance policies. If both husband and wife pay insurance premiums, they do receive the appropriate life insurance relief for the total of the premiums which they pay, so that a husband and wife paying, for example, a total of £30 by way of premium receive exactly the same relief as a married man, paying the same premium from the same income, would receive. The present law is therefore entirely consistent, given the basic principle that the income of husband and wife are aggregated. Where they are separate, then proportionate life insurance relief is given against the two separate incomes.
I do not feel, therefore, that either the narrower purpose which the hon. Member has in mind or the wider purpose,

would justify this very large further increase in life insurance relief.

Question put and negatived.

New Clause.—(AMENDMENT OF VEHICLES (EXCISE) ACT, 1949, AS TO TOWER WAGONS.)

As from the beginning of the year nineteen hundred and fifty-eight, the definition of "tower wagon" in subsection (1) of section twenty-seven of the Vehicles (Excise) Act. 1949, shall have effect as if the reference to a telescopic contrivance designed for facilitating the erection, inspection, repair or maintenance of overhead structures or equipment included any expanding or extensible contrivance so designed.—[Mr. Wigg.]

Brought up, and read the First time.

Mr. George Wigg: I beg to move, That the Clause be read a Second time.

Hon. Members: Hear, hear.

Mr. Wigg: I am overwhelmed by the enthusiasm of my hon. Friends. Under Section 27 of the Vehicles (Excise) Act, 1949, a tower wagon carries a considerably lower rate of Excise Duty than an ordinary vehicle. In my constituency, a firm manufactures a tower wagon of a kind not covered by the 1949 Act. The manufacture of these tower wagons affords a comfortable livelihood to a considerable number of my constituents and is a tribute to their skills and a testimony to the ingenuity, engineering ability and enterprise of the firm that undertook its production.
Originally this vehicle was made in Canada in a primitive sort of way in connection with the picking of fruit. Simon Engineering (Midland) Ltd. saw its possibilities and acquired the world-wide rights, North America excluded. Subsequently the firm developed this highly ingenious mechanical contrivance which is now used by the Navy and the Royal Air Force, but not by the Army, which is always a little behind the Royal Air Force, and also by local authorities. Unfortunately it is of such a new character, since it has been in production only for eighteen months, that it does not conform strictly to the requirements of the 1949 Act which says:
'Tower wagon' means a vehicle…into which there is built, as part of the vehicle, a telescopic contrivance designed for facilitating the erection, inspection, repair or maintenance of overhaul structures or equipment.…


The Dudley vehicle is not telescopic. It is an extensile and expanding contrivance. Thus this quite novel machine is put at a very considerable disadvantage when it is sold to local authorities or to organisations like the Electricity Authority. These bodies look not only at the original cost but at the cost of its use over the years.
Therefore I ask the Government to help this completely new venture, which although it has been brought into production only in the last eighteen months and has a considerable export value. I ask them to make the small concession asked for in the proposed Clause and so enable this contrivance to be broughtt into the same category as those that are telescopic. This would enable the firm to expand, find a wider home base for its production, spread its overhead charges and eventually to compete more keenly in the export market.
I make a point of that because the country is very concerned with exports. In the last eighteen months these machines have been exported to Trinidad, Southern Rhodesia, Abadan, Belgium, Malaya, Sweden, Spain, France, Switzerland, Nigeria, Norway, the Persian Gulf, India, Australia, New Zealand, Christmas Island and Bulawayo. [HON. MEMBERS: "Hear, hear."] I do not apologise at this late hour for providing a subject of laughter for both sides of the Committee, but I should have thought this was a record of which a small enterprise could be very proud, for it makes a contribution to the well-being of the people of Dudley and an addition to the country's economy. For that reason, although it is small, it ought to be encouraged and I, as the hon. Member for Dudley, am proud to pay tribute to the skill of the operatives and management responsible. I hope the Financial Secretary will accept what I have said and will accept this Clause.

Mr. Powell: When you, Sir William, called the hon. Member for Dudley (Mr. Wigg) I could not help the words coming into my mind:
The setting sun and music at the close…is sweetest last.
A Financial Secretary has ex officio during the course of a Finance Bill to say "No" so often that I think some people

come to believe eventually that he likes doing so. It is, therefore, a fortunate chance that I find myself in the position of advising the Committee to accept this, the last new Clause to be proposed at this stage. The hon. Member has made the case showing that it is unreasonable that this contrivance should be excluded from the benefit of the 1949 Act simply because it cannot strictly be defined as "telescopic" in character.

Mr. Harold Wilson: Since tributes are flying around the Committee at this late hour, I think a small word of thanks should be said to the Financial Secretary and the Chancellor, who must have authorised him to do so, for accepting this Clause. The Treasury Bench has been unusually obdurate during this stage of the Bill and not very forthcoming in accepting all the more important and valuable new Clauses and Amendments which have been moved, but it is very good that it has been able to accept this one.
As tributes are being paid, I think every tribute should be paid to my hon. Friend the Member for Dudley (Mr. Wigg) for discovering an important subject of this kind and embodying it in a Clause and especially for getting it in order. I think he was advised by all the financial pundits on this side of the Committee that his chances of getting it in order were extremely small. That he not only did so, almost unaided, but managed to secure that it was called, with your good will and tolerance, Sir William, and that of the Chairman of Ways and Means, and went on to persuade the Treasury to accept it, reveals a devotion to Parliamentary duty almost unrivalled, at any rate in the course of this Committee stage, and a great degree of success in all he has done.
I would use the words he used more than once in paying tribute to the workers and management in Dudley, their ingenuity and courage. I think those words should be applied also to him and, even though it is almost midnight, I hope that his efforts on behalf of his constituency will not go unnoticed in Dudley.

Question put and agreed to.

Clause read a Second time and added to the Bill.

Second Schedule.—(DUTIES AND DRAW- BACKS ON COMPOSITE GOODS.)

Motion made, and Question proposed, That this Schedule be the Second Schedule to the Bill.

11.45 p.m.

Mr. H. Wilson: This is a very important and lengthy Schedule. I think that we should be justified in asking for a very full account of all it means. The Committee will remember that when we debated Clause 5, which was the occasion of a noteworthy speech by my hon. Friend the Member for Oldham, West (Mr. Hale), in which at one stage he got his hair oil mixed up with his ruin, my hon. Friend pointed out that this was a very important Schedule not merely for what it does, but for the procedure. It is a most unusual Schedule. It gives the Board of Customs and Excise unprecedented powers in fixing the rates for some of these composite goods.
I do not propose to press the Financial Secretary to give a full explanation of the Schedule, although I am sure that he has a very full brief on it. He has shown that he is not only good at mastering his brief, but even, sometimes, at putting it into his own words. I merely want to point out and to put on record that new powers are given to the Board of Customs and Excise in the Schedule and that we shall have to watch carefully see how they are to be used.

Question put and agreed to.

Third Schedule agreed to.

Ninth Schedule agreed to.

Bill reported, with Amendments; as amended, to be considered Tomorrow and to be printed. [Bill 112]

FISHING VESSELS (OIL CONVERSION GRANTS)

11.47 p.m.

The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. J. B. Godlier): I beg to move,
That the White Fish and Herring Industries (Conversion Grants) Scheme, 1957, dated 27th May 1957, a copy of which was laid before this House on 28th May, be approved.
I do not wish to detain the House at this late hour, but may I just remind it that Section 1 of the main Act which became law just before the Whitsun Recess amended the White Fish Order, 1953, so as to enable the White Fish Authority and the Herring Industry Board to make grants towards the cost of converting coal-burning fishing vessels to the use of oil fuel. The scheme which I am now commending concerns arrangements for paying these grants. I think that it is quite straightforward. Although I have no wish to detain the House, if any hon. Members have points which they wish to raise, I naturally should be very happy to deal with them.

11.49 p.m.

Mr. James H. Hoy: There are one or two questions which I wish to ask about the Scheme. I think that the House ought to be reminded that we had a previous one and that it was cancelled by the Government. Indeed, its cancellation caused some concern in my constituency, certainly to one firm, which accepted the word of the Government that the Scheme would go through. But then, it will be remembered, we had some trouble in the Middle East and the Scheme was cancelled. As a consequence of that, considerable loss was caused to a firm in my constituency. I am sorry that this Scheme is not antedated sufficiently at least to recoup the firm for loss sustained mainly as a result of Government action I think that on this occasion we are entitled to ask for an assurance that there will be no further cancellation, and that any firm that undertakes the work will receive the subsidy.
I should like an explanation of paragraph 9, which says that the Government are to take powers to inspect the work as it is being done. In other words, they want to see that it is a proper conversion, and that the money is properly


spent. On a previous occasion—I admit that it was in the years immediately following the war, and the Under-Secretary would, perhaps, know about it—certain engines had to be installed in these boats because what the industry regarded as the best type of engine could not be obtained.
As a result, certain of these boats have had to be taken out of commission altogether. I mentioned on a previous occasion that a constituent of mine, because of the very bad condition of the engine—the only one that he could secure—was put out of business, and that the White Fish Authority was attempting to extract payment of some thousands of pounds for a vessel which was no longer of any use to the purchaser. If the Government are to take all the powers of inspection contained in the Scheme, I want to know if they will also accept responsibility should the engines prove to be not successful.
The Government say also that they will give grants only to such types of vessels as they approve. In other words, they retain the right to restrict payment to certain vessels. Does that mean a type of vessel? The trawler industry is asking what is to be its future, because of the competition it is getting from the seine net vessels. I know that we raised this matter quite recently with the Joint Under-Secretary, but is it the intention of the Government to differentiate in this Scheme between types of vessels? If so, perhaps they would make a statement on the subject. Does it mean that the grants are to be limited to particular types? That is very important. The industry would certainly like to have a Government statement on the wider issue, but perhaps the Joint Under-Secretary will be prepared to make a statement as to exactly what is meant by these words.
In view of the lateness of the hour I will not say anything more, except, perhaps, to add that any step which provides for the conversion of these boats from coal to oil burning is, of course, a step in the right direction, and to that extent the industry welcomes what is now being done.

11.54 p.m.

Sir Robert Boothby: I rise only to say, in a sentence, that I very much hope that in this busi-

ness of grants for fishing boats the Minister will take steps to secure greater co-operation between the White Fish Authority and the Herring Industry Board. That applies not only to these present grants but to all grants. As a matter of fact, I believe that, in making these grants, there is no co-operation whatsoever between those two bodies, and that unless there is greater co-operation we shall never get the balanced fishing fleet that we want. In the re-conversion of coal burning to oil burning, and generally throughout the whole range, I should like to see a far greater degree of consultation and co-ordination between the two bodies. I can assure my hon. Friend that I know of cases where, if the owner of the boat does not get a grant from one authority, he will go to the other in the hope of getting it there, and will very often succeed.
We are spending a lot of public money on these conversion grants, and it is vital that there should be the closest coordination and joint policy on the part of the White Fish Authority and the Herring Industry Board, so that there shall not be overlapping and confusion, with no plan or design in mind. We are attempting to build a new fishing fleet, and "fishing" is a wide term, because boats are dual-purpose and can move from herring to white fishing and back again. Unless there is greater co-ordination and some design and policy, I think we shall get into deepening chaos. I hope we shall get some assurance on that from my hon. Friend

11.56 p.m.

Mr. G. R. Howard (St. Ives): I wish to add only a word or two at this hour, on the subject which my hon. Friend the Member for East Aberdeenshire (Sir R. Boothby) has introduced. Between the Herring Industry Board and the White Fish Authority there may be many duplications of function. It seems to me that we have got to think on the lines of whether it would be possible to merge these two bodies, so that instead of having one in Edinburgh and one in London, they could be merged together as one authority in London, with an office in Edinburgh, if desired.
I should like to congratulate my hon. Friend the Parliamentary Secretary and the Government on carrying out the Scheme, on which they set their minds, and in connection with which they


promised, before the Whitsun Recess, to give a specific date for starting these grants and loans. Many of us have been pressing for a long time for the conversion from coal to oil in these older fishing vessels, because, I think, all the industry wishes to get rid of the coal-burning type. With the increasing price of coal those vessels are no longer economical, and the sooner they change over to oil burning the better it will be.
1 should like my hon. Friend to bear in mind the difficult situation of these two bodies, the Herring Industry Board and the White Fish Authority, and to see whether he could consider the possible amalgamation of them. Both have been doing a good job in their own particular sphere for the fishing industry, but some of us think they could do a much better job if they were amalgamated, so that we could cut down expenditure and coordinate the various applications for grants and loans, which are, after all, to help the fishing industry as a whole.
12 midnight.

Mr. Godber: With your permission, Mr. Speaker, and that of the House, I should like to reply to one or two questions which hon. Members have raised. In reply to the hon. Member for Leith (Mr. Hoy) I would say that I am aware of the case to which he referred, and I have a certain amount of sympathy for it, but to put the matter in the right perspective I would remind him that when the original Bill was brought in owners were warned that they ought not to put conversions in hand without consulting the White Fish Authority or the Herring Industry Board. I think it well that that should be remembered.
If the case I am thinking of is the same as the one the hon. Member has in mind, I can say that all that has happened is that the ship has been gutted. Provided no contract was entered into for the provision of new engines before 18th April, the operative date, it will still rank for grant for the main part of the cost. That ought to he of some help to the hon. Member's constituent.
As to type of engine, I do not think I could give an undertaking that if any engine failed the Government would be held responsible. I think the hon. Member was being a little hopeful in suggesting that. I would remind him that

this is only for conversions from coal to oil burning engines, and any company seeking to make such conversions will, as a matter of normal prudence, endeavour to get the right type of engines. Naturally the White Fish Authority and the Herring Industry Board would give any advice they could on that.
My hon. Friend the Member for East Aberdeenshire (Sir R. Boothby) and my hon. Friend the Member for St. Ives (Mr. G. R. Howard) brought up a fairly large problem, the co-ordination of these two bodies. I do not think it would be proper for me at this time of night to enter into a discussion of that very important subject. I noted what my two hon. Friends said. I would remind them that the functions which these two bodies were set up to perform differ in many substantial respects, although I can quite understand what my hon. Friends said and we shall naturally take heed of what they have said.
I am grateful to my hon. Friend the Member for St. Ives for his words of thanks. I am sure the Scheme will prove helpful. I do not say it is a big Scheme, but it will be helpful.

Mr. Hoy: I would remind the hon. Gentleman that I raised a rather important question on paragraph 11, which says:
In the payment of grants in pursuance of this scheme, the administering authority shall have regard to the needs and interests of the white fish industry or that section thereof to which the applicant belongs.…
I was asking, is there any intention to limit these grants to any section of the industry? That is an important question.

Mr. Godber: We are not limiting it to any section of the industry. We are limiting it only by type of boat to come within the Scheme—that is, coal-burning boats which could reasonably be re-equipped with oil fuel engines. There are not a great many, I am advised, which will qualify, because of the terms of the Scheme. Many coal-burning boats are very old, and it would not be reasonable to re-engine them.

Mr. Hoy: I do not want to take this matter too far at this hour, but the type of boat is outlined in paragraph 2, and then there is this further qualification in paragraph 11. I want to know, is there a difference between these two things?

Mr. Godber: No. I am saying we are not limiting it in regard to types. There is no intention of limitation. Each case will be looked at on its merits by either of the bodies concerned, and will be considered from the point of view of the justification of expenditure on re-engining. There is no intention of limiting it by type.

Mr. Tom Fraser: My hon. Friend (Mr. Hoy) is asking a very proper point. Paragraph 2 sets out the vessels which qualify. Paragraph 11 states:
In the payment of grants in pursuance of this scheme, the administering authority shall have regard to the needs and interests of the white fish industry or that section thereof to which the applicant belongs…
What my hon. Friend is asking is whether this qualifies what is written in paragraph 2. If this means anything at all, surely he is right in making the assumption that if an owner belongs to a particular section of the industry, the authority concerned might very well take the view that, in the circumstances and conditions obtaining at the time, a vessel ought not to be assisted, and a grant not paid. Surely that is the purpose of paragraph 11?

Mr. Godber: It has got to be an economic proposition. I think that possibly the words go a little wide in that respect, but it is the intention to see that no uneconomic proposition should be included. That is the sole purpose of the wording in the Clause. Hon. Members need not be unduly alarmed by it. Such boats that are reasonable propositions will come within the terms of the Scheme.
I am afraid the case mentioned by the hon. Member for Leith in regard to conversion was not the one I was thinking of, so that in the assurance which I gave earlier I went perhaps a little too far. I understood that it was a case which was well known to us. But, as I have said, the warning was given on this particular matter that no new conversion could go ahead without consultation, and I am sorry if the constituent of the hon. Member for Leith suffered in any way.
I have tried to answer the various points raised this evening and I hope that, with these explanations, the House will approve this Scheme which will, I be-

lieve, make a real and valuable contribution to the welfare of the white fish and herring fleets.

Question put and agreed to.

Resolved,
That the White Fish and Herring Industries (Conversion Grants) Scheme, 1957, dated 27th May, 1957, a copy of which was laid before this House on 28th May, be approved

Orders of the Day — NATIONAL SERVICE MEN (COMPASSIONATE RELEASE)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Barber.]

12.8 a.m.

Mr. Frank Anson: In the next quarter of an hour, I propose to show that thousands of National Service men, their widowed mothers and their young sisters and brothers, are suffering great misery and real hardship; and, further, that in the next four years thousands more young men who will be called into National Service, and their families, will suffer the same unhappiness.
This needless suffering will continue unless the Minister reaffirms certain clear undertakings given by the Government three months ago—which, I regret to say, are now in doubt—and, in addition, promises to make clear to the young men involved what the relaxations really are.
I believe that the call-up is a curse to the vast majority of men concerned; but in certain cases it is a complete tragedy. It is to these that I want to refer.
On 4th March the Parliamentary Secretary to the Ministry of Labour and National Service, winding-up the debate on National Service, made an announcement which brought widespread relief, and I hope that the House will forgive me if I read it, because I do not want in any way to distort what has been said. This is what the Parliamentary Secretary said:
The circumstances in which exceptional hardship can arise are, of course, many and variable, but our experience has shown that there are certain classes of cases where exceptional hardship would be likely to arise from call up and where alternative arrangements are often most difficult to make. Those include such cases as that of the man with a relative physically dependent upon him, that of


the man who is the mainstay of an orphaned family, that of the widower with a child or children to look after, that of a man living alone with a widowed mother. Alt these cases will be considered very sympathetically. I can assure the HOUSe."—[OFFICIAL REPORT, 4th March, 1957; Vol. 566, c. 148, 149.]*
That was a most welcome statement. I have read it scores of times and I can see nothing in it but a clear, cast-iron undertaking.
A month later the Government not only confirmed this relaxation but went further and extended the relaxation to men already doing their National Service. On 2nd April I asked the Secretary of State for War
whether he has considered the recently amended National Service Regulations permitting the postponement of call-up
in certain cases. I then set out the categories which I have just mentioned, and continued asking him
whether National Service men at present serving in the Army will be allowed to apply for postponement of further service in such cases of exceptional hardship.
The Secretary of State for War replied:
Broadly speaking, grounds which would justify the postponement of call-up for National Service would justify the release on compassionate grounds of a National Service man who was already carrying out his National Service."—[OFFICIAL REPORT, 2nd April, 1957; Vol. 568, c. 216, 217.]
So far, so good. Then on 10th April and 5th June I asked the Minister of Defence if he was aware that there were many National Service men in these categories which I carefully listed in my Question, and what steps he was taking to inform them that they now had a right to compassionate release. On neither occasion did the Minister suggest that my list of categories was incorrect, but he did say that he did not think that any steps to publicise the relaxations were necessary since he had no reason to think that National Service men were not well aware of the grounds on which they could apply for compassionate release. He agreed to ask the Service Ministers to ensure that conditions for compassionate release conformed with those governing postponement of call-up but he did not accept my suggestion that he should publish in all units of the three Services an announcement that applications for compassionate release should be sympathetically considered in the categories which I listed.
*See col. 1274 for reference to correction.

I cannot accept that these men are aware of the relaxations. They do not know, and I have some evidence of it here. When the Minister declined to post the notices in the units I wrote a very brief letter to the News Chronicle, the Daily Herald, the Manchester Evening News and the Evening Chronicle. I was astounded at the results. I was deluged with letters, pitiful letters, from widowed mothers of National Service men all over the country. I have a few of them here. They regarded this as very wonderful news. In the newspaper industry one letter is accepted as representing the views of a thousand people who felt that way but did not bother to write.
Here is a typical letter.
I am a widow living alone—with no income except widow's pension and National Assistance. My son has been in the army for 14 months and it has been a hard struggle and a lonely life for me. I am 62 and my health is very unsettled. My nerves are getting worse as I don't sleep at night being alone in the house.
Here is a letter from a National Service man:
My mother has not worked for some time. Her arthritis has now spread to her neck and back. For this she wears a special collar which the hospital has made for her. Her total income is £2 4s. 6d. plus my allowance of £1 4s. 6d.
Finally, another mother writes:
I myself am all alone, my family having passed away. I am a registered disabled person, having had epilepsy for twenty years. When I have such occurrences, I have to manage at home as best I can, which is a great worry to my son.
Does the Minister think that people in such circumstances should be left on their own? if he agrees that they should not, I would say to him that these mothers and sons would still have been unaware of the relaxation which the Government have made if they had not chanced to see a small letter in the newspaper. There must be thousands of similar people who still remain ignorant of their rights and who are suffering needlessly.
If Hitler were about to invade the country, there would be some justification for the Government's attitude, but that is not the situation and these young men, all of them having useful jobs at home with which they could support their families, are mostly wasting their time completely in "square bashing", peeling potatoes or simply sitting on their backsides. I hope the Minister will not reply that


where there are sick mothers, National Service men can secure release. I stress that in the categories which I have listed, there was no condition that the widowed mother be ill. There was no reference whatever to that.
When I sought this Adjournment debate, my intention was to press the Government to change their mind and to put up in all units a simple notice announcing the conditions for compassionate release, and to ask that men registering for National Service should be told these conditions on their call-up notice. Both of these things could be done quite simply, and it could then no longer be said that the Government were concealing from the men vitally concerned the information which they have already given to the House of Commons. I plead with the Minister to agree and thus to relieve a mass of human suffering.
Now, however, comes the alarming turn in the story. It arose after I had asked for this debate but it adds greatly to the seriousness of the matter. I recently wrote to the Under-Secretary of State for War about a Salford war widow who had a young daughter at school and whose son had been a year in the Army. The family falls precisely into one of the categories I have mentioned, one of the classes specified by the Government. Incidentally, this widow's total income for herself and her small daughter, including the allowance from her son, is the enormous sum of £4 8s.; but that is not the point with which I am concerned.
I assumed that that young man would be released without delay. To my dismay, I received a letter dated 22nd June from the Under-Secretary of State saying:
Nevertheless, we are unable to release a National Service man who has been available to the Army because his next of kin is ill unless the next of kin's condition is considered critical or when some other form of extreme hardship exists.
I repeat that on no occasion in their earlier statements did the Government make any mention of illness being a condition. I maintain, therefore, that the Government either did not mean what they said or are "welshing" on their undertaking.
I do not want to be misunderstood. I am not accusing the Minister personally

of dodging the issue, but I do accuse the Government of going back on what were clear and important undertakings only three months ago. I hope that the poor recruiting figures have in no way caused this backsliding, as I regard it.
I feel extremely bitter about this matter, but not half so bitter as the widows and their sons will feel when they find out the truth. I hope that this evening the Minister will be able to clear up the matter in a way which is satisfactory not only to me but—much more important—to these thousands of decent people.

12.20 a.m.

The Under-Secretary of State for War (Mr. Julian Amery): My right hon. Friend the Minister of Defence has asked me to reply.
At the outset I want to make a distinction between two types of compassionate cases—those which are eligible for postponement before call-up, and are dealt with by the Ministry of Labour, and those which are eligible for release by the Service Ministries, which, in the main, I propose to deal with this evening. We in the Service Ministries and in the Ministry of Labour try to adopt the same approach and to keep in step.
First, I want to say a word about the background against which these releases or postponements take place. The Government's intention is, as the hon. Member knows, to run down the Army over the next five years, so that the last National Service man will be called up in 1960 and will be out at the end of 1962. This cannot be done at once. It is only as the new weapons and the new types of transport aircraft are phased into service that new dispositions can be adopted and the call upon manpower reduced.
As the need for manpower falls so fewer men will be called up. My right hon. Friend the Minister of Labour has explained how the reduction of the intake will operate. I want to stress that when his plans have taken effect those who are still called up will be needed by the Services and will have a job to do. We shall not have any more men than we need at any one stage. There will be no superfluity. Therefore, we shall not be in a position to give blanket releases for whole categories of individuals.
What we can do, are doing, and will do, is to accept applications for compassionate release where there is real hardship. Our standard of the degree of hardship which justifies compassionate release is broadly the same as that adopted by the Ministry of Labour in granting compassionate postponements. In both cases our approach has been considerably more generous—as I shall try to show—since the laying of the White Paper on Defence.
Tonight and on previous occasions the hon. Member has sought to make two points. First, he has tried to establish that the Government are committed to automatic release of certain defined categories of compassionate cases. He has also asked, consequentially, that wider publicity should be given to these categories, so that young men who come within them may know that they have what he holds to be a right of release.
First, I want to say a word about the question of automatic release of certain defined categories. On 12th February my right hon. Friend the Minister of Labour said that he would consider cases of domestic hardship with the fullest sympathy, and on 4th March my hon. Friend the Parliamentary Secretary to the Ministry of Labour made a statement which the hon. Member quoted in detail, and which I therefore will not quote again. The hon. Member called this a clear, cast-iron undertaking The point I want to make is that my hon. Friend did not say that all individuals who fell into the categories described in his statement had a right to postponement by the Ministry of Labour and therefore release by the Forces. All he said was that individuals in these categories often suffer hardship and that where hardship was established very sympathetic consideration would be given to appeals for compassionate postponement.
On 19th March the hon. Member asked the Minister of Labour if he would exempt from National Service all men who were the main breadwinners—for example, the sons of widowed mothers with one or two children. My right hon. Friend replied that he could only say that applications in such circumstances would be most sympathetically considered but that he was not prepared to accept the hon. Member's suggestion that postponement should be automatic to anyone in

such circumstances. He refused that suggestion on the ground that it would produce absurd anomalies. The main breadwinner of a widow with one or two children might be a millionaire.
The hon. Gentleman referred to the Question which he put to the Secretary of State for War. All that my right hon. Friend's answer shows is that our practice and that of the Ministry of Labour are in line. The Question which the hon. Member put to my right hon. Friend shows that he misunderstood the position. He asked the Secretary of State for War
…"whether he has considered the recently amended National Service Regulations permitting postponement of call-up in the case of…"—[OFFICIAL REPORT: 2nd April, 1957; Vol. 568, c. 216.]
and he cited several cases. Where he went wrong is that postponement under the Amended Regulations is not granted to individuals in the circumstances described merely because they are in those circumstances, but only where the circumstances give rise to hardship. What is true of postponement of call-up applies equally to release.
The hon. Gentleman raised the question of Private Wrenn, about whom he corresponded with me. That is a perfectly fair example from which he has drawn the wrong conclusion. Private Wrenn is the son of a widow who has a 15-year-old daughter at school. The hon. Member argued that she is in the category to which the Parliamenary Secretary referred and claimed that her son should therefore be released. My hon. Friend merely said that the categories which he described were illustrations of cases where hardship often occurs.
Our view in the War Office is that in this case there is no exceptional hardship. I have already sent the details of income, and of medical and other circumstances to the hon. Gentleman. I think the income figure is a little higher than the one he gave, but I do not want to bring Mrs. Wrenn's private affairs into public notice. Whether or not the hon. Member agrees with our assessment—and we are always ready to consider any new evidence that he or Mrs. Wrenn may care to send us—Private Wrenn's release could be considered only if hardship could be established. It could not be considered simply on the ground that his


mother is a widow with a child. Hardship is the test.
The run down of the Army has made it possible for the Ministry of Labour and National Service and the Armed Forces to interpret hardship more generously than hitherto and to grant compassionate postponement or release accordingly. We know from our experience the categories in which hardship most often occurs, but we do not accept that because a case fits one of these categories there must be hardship and therefore release. We believe that it is wrong to treat individuals in categories. Hardship takes many different forms and we think it wiser to judge each case on its merits.
A word on publicity. The hon. Member urged that wider notice should be given of the grounds on which compassionate release is granted. He seemed to think that young men in the Services were not fully informed of their rights and of the help they could receive. I therefore think it right to say a few words on this matter.
When a man registers he receives a leaflet explaining his right to postponement on compassionate grounds. When he joins his unit he is seen by his commanding officer or by another officer acting on his behalf. The hon. Gentleman gave some examples of young men who did not seem to know their rights. Let me give him an example which occurred the other day and which was dealt with in the office this morning. A young man was called up on 23rd May. He had made no application for postment. Both his parents were blind. His commanding officer saw him, learned his story, and at once wrote to the Association for the Blind who reported that the parents felt that, in spite of their predicament, they had no right to ask for a postponement. The commanding officer therefore wrote to the War Office suggesting his release. Release has been granted and today the young man in question was discharged.
As this example shows, a young man would be encouraged to interview his commanding officer and to bring to the attention of the Army any circumstances which tend to make him unhappy. Then, until he leaves his unit, his welfare is the business of his officers and, if he

needs help, he can ask for it. The procedure for application for compassionate discharge is well known to all units and each will have a copy of the relevant Army Council Instruction. A soldier can apply to his commanding officer for compassionate release and the commanding officer can apply direct to the War Office, thus cutting out the usual chain of command and channels of communication. In the War Office all applications are dealt with by a small staff of experienced soldiers and civil servants who are very experienced in this work. They in their turn are helped in their local inquiries by the police, doctors, S.S.A.F.A., the Forces Help Society, and similar organisations. I should like to pay my tribute tonight to all of them for their help.
National Service, of course, involves a degree of hardship for most of the young men involved. Some of this, the financial hardship, is alleviated by National Service grants. There is also compassionate leave, and when it seems necessary for domestic reasons we may keep a man temporarily in this country. There is also the Dilfor Scheme under which we fly relatives and soldiers to the bedside of next-of-kin who are dangerously ill. Altogether some 15,000 compassionate cases of all kinds are dealt with by the War Office every year.
Since the hon. Member gave notice of the debate tonight, I have reviewed the whole record of the War Office in the matter of compassionate releases. I have also made inquiries of my colleagues in the Admiralty and the Air Ministry. I have no doubt after making this review that our record in the past has been a good one. I am equally satisfied that we are keeping in step with the Ministry of Labour and carrying out the Government's decision to adopt a more generous approach to cases of hardship than was possible hitherto. This, it may be said, is only my opinion. Well, the proof of the pudding is in the eating. My inquiries show that in the four months 1st March to 30th June, 1957, 56 per cent. of applications for discharge on compassionate grounds submitted to the War Office were approved as against only 28 per cent. in the same period last year. Here I think is the final answer to the arguments advanced by the hon. Member and the proof is that the Government have kept their word.

Mr. Allaun: May I address two brief questions to the Minister? While agreeing that there has been a relaxation, does the Minister deny that there are large numbers of instances of hardship where the young man is unaware of the relaxation? Secondly, the Parliamentary Secretary to the Ministry of Labour stated that exceptional hardship is likely to arise in the case of a widow with one or more children. In the Wrenn case—

Mr. Speaker: Order. The hon. Member is, within reason, entitled to ask a question, but he cannot make another speech.

Mr. Allaun: I was finishing, Mr. Speaker. Why should that case be refused when it is as hard a case as any of a widow with one child, apart from sickness, and sickness was not referred to in any way by the Government?

Mr. Amery: If I may I will take the second question first. There is no undertaking that all widows with a dependant child would have a son in the Forces released. All that my hon. Friend said was that hardship was often caused in certain categories. In fact—and this is an unfortunate confusion—what he actually said in that debate was "a widower" and not "a widow." As a

result of a printer's error, the word "widow" crept into the Daily Report. I do not want to make much of the point, but the hon. Gentleman will find in the Bound Volume of HANSARD that "widower" was the word used.
The essence of the point is that real hardship must be established. If the widow, for example, was a very rich person, there would be no question of release. In the case of Mrs. Wrenn—and this is a marginal case—the opinion of the Department, after consultations with local sources of inquiry, and so on, has been that there is no real hardship.
The hon. Gentleman may think that we are right or that we are wrong. That is a matter of opinion between himself and us. The point I want to make is that it is only if real hardship is established that release would be justified and not simply because the soldier in question is the son of a widowed mother with a dependant child. Could the hon. Gentleman refresh my memory about the other question he asked?

Mr. Allaun: Yes, certainly—

Mr. Speaker: Order.

Question put and agreed to.

Adjosurned accordingly at twenty-four minutes to One o'clock.